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Italy’s bank backstop fund Atlante reaches €4 bn threshold

by  Marco Ferrando

Including the €500 million from state-backed lender Cassa Depositi e Prestiti (CDP) approved on Wednesday, the Atlante back backstopping fund should start out resources worth around €4 billion, the minimum of a range whose maximum limit is €6 billion.

The main Italian banks have said they will contribute to Atlante, the vehicle designed to support the recapitalization of banks and the securitization of non-performing loans. The deadline to subscribe to the fund was yesterday at midnight.

The management and supervisory boards of Intesa Sanpaolo authorized a contribution of up to €1 billion. NPLs remain a priority for Intesa, which in a statement yesterday said “the creation of Atlante will allow Italian banks to deconsolidate a significant amount of NPLs from their balance sheets at values consistent with non-speculative market yields.”

The lender said the fund will “ensure a positive outcome of the capital increases required by the Supervisory Authorities for banks that are going to face objective difficulties in the short term due to their high level of NPLs.”

The board of UniCredit, an early supporter of the plan, also because it is the sole guarantor of Popolare Vicenza's capital increase, last week authorized Chief Executive Federico Ghizzoni to sign up for up to 1,000 shares, for a total of €1 billion. Popolare Vicenza’s capital increase is due to get underway on Monday.

The board of Monte dei Paschi di Siena and the executive board of Carige also met yesterday, approving a contribution of €50 million and €20 million respectively, and other boards also met.

After a first closing, the fund will remain open to additional contributions, in particular from other banks, insurers and funds.

After Fitch's criticism of the operation and the “lights and shadows” raised by Standard & Poor's, rating agency DBRS promoted Atlante yesterday.

The fund “is a useful tool to help shield the Italian banking system from the risk of financial instability in the short term,” DBRS said.

According to DBRS analysts, Atlante will help to reduce the uncertainty over the expected capital increases by Banca Popolare di Vicenza and Veneto Banca, acting as a backstop facility in case of a negative impact on investor confidence. The agency considers positively the creation of the vehicle, “as long as it does not distort markets over the medium to long term.”