Italian bank Carige said today it needed to raise €630m in capital after posting a €273m loss for 2018, hit by a clean-up of bad loans as it looks for a buyer.
The European Central Bank put Carige under temporary administration at the start of the year after the top investor in Italy's 10th largest lender blocked a €400m capital raising in December.
The cash call would have allowed Carige to bolster its core capital by converting a €320m hybrid bond the lender had sold to Italian banks in December after proving unable to place it on the market.
The bank said the capital raising would allow it to complete an already agreed €1.9 billion bad loan sale as well as reimburse the hybrid bond by mid-2019. The bond can be repaid in shares.
In unveiling full-year results, several Italian lenders said they had written down in full the investment in Carige's hybrid bond.
Italy's government has also run to Carige's rescue, pledging up to €1.3 billion in aid funds and using part of that to provide a guarantee on €2 billion of debt the bank recently issued to beef up its liquidity ratios.