A tale of two capital raisings
In a last ditch attempt to pull off a €500 million rights issue last year, Paolo Fiorentino embarked on a local media blitz in Banca Carige’s home region around Genoa. Persuading local people – many of them customers of the bank – to follow main shareholder Vittorio Malacalza and take up their rights, was a key part of saving the mid-tier Italian lender.
“We worked very much in the local constituency… leveraging the traditional channels,” Fiorentino told Euromoney shortly after the deal closed, when he was still chief executive. Retail investors ended up providing more than three times as much of the equity as institutions.
One year on, Carige is the latest example of how European banks’ reliance on their retail customers for capital ends up disappointing the stakeholders they need most to protect. A row with Malacalza saw Fiorentino replaced by former UBS banker Fabio Innocenti in September, while a scare over Italy’s budget intentions has pushed down Carige’s shares even further below a 1 cent rights-issue price, wiping out two thirds of their value by November.
