Banca Carige : Activation of important initiatives for the Bank's future

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PRESS RELEASE

CARIGE'S TEMPORARY ADMINISTRATORS ACTIVATE IMPORTANT

INITIATIVES FOR THE BANK'S FUTURE

•  Proposal submitted to the Voluntary Scheme for redefining subordinated debt terms

•  Due diligence process initiated for further reducing the Bank's NPEs

•  State-backed guarantee being accessed to support medium-term funding

•  Precautionary recapitalisation only a residual option

Genoa, 8 January 2019 - In the last few hours, Banca Carige's Temporary Administrators have activated fundamental initiatives for the future of the Bank.

Having regard to the ECB's Draft decision which accepted the Capital Conservation Plan extending the date by which compliance with all capital requirements shall be achieved in a sustainable manner to 31/12/2019, the Bank's Temporary Administrators and the Chairman of the Surveillance Committee, Prof. Gianluca Brancadoro, met the Management of the Voluntary Intervention Scheme ("VIS") of the Italian Interbank Deposit Protection Fund yesterday, and submitted a proposal designed to pave the way for redefining the terms of the EUR 320 mln subordinated debt issuance underwritten by the VIS on 30 November 2018, so as to ensure its sustainability within the framework of the Business Plan being prepared and in view of the planned business combination.

In parallel, the Temporary Administrators, Fabio Innocenzi, Raffaele Lener and Pietro Modiano, have decided to start a due diligence on the Bank's NPEs, which will be led by industry-leading players with the aim of a further drastic NPE reduction (after the over EUR 1.5 bn disposal just completed) geared towards having an NPE ratio of 5 to 10% in the Business Plan. The Bank's level would thus be below system average. As was the case with its recent market transactions, Carige's objective is to reduce the share of NPEs with no material impact on the Bank's capital ratios. Thanks to loan loss provisions reflecting the ECB's guidance and in line with the outcome of Carige's latest UTP and bad loan disposals, the Bank will seek that the impact from additional provisions, if any, and the reduction of risk weighted assets be such as not to alter, if not marginally, the capital ratios set in the Capital Conservation Plan.

Some of the most qualified national and foreign investors will be invited to participate in the due diligence process.

As a positive result of these two initiatives, the Business Plan, which will be presented by the end of 2019, will charter a credible path not only in terms of business sustainability but also, and particularly, in terms of market appeal for a business combination.

Against this background, with a view to ensuring stability of medium-term funding in this phase of transition, while benefiting from the law decree approved by the Council of Ministers yesterday, the Temporary Administrators are in the process of applying for access to the state-backed guarantee on bonds issued.

It should be noted that the precautionary recapitalisation referred to in the press release of the Council of Ministers is to be considered as an additional measure for the protection of customers, to be activated only as a residual option.

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