MNI SOURCES:4BLN Euro Nationalisation Last-Ditch Carige Option

--Nationalization An "Extreme Option In Worst-Case Scenario", Sources Say

By Silvia Marchetti

     ROME (MNI) - Italy could temporarily nationalise ailing lender Carige by

using bridge financing of up to E4 billion, but only if a planned market

solution to be backed by E3 billion in state guarantees for new bonds fails,

government sources told MNI.

     "For now, we are talking of state guarantees issued until June by the

Treasury for attractive new Carige bonds, potentially at a very profitable rate,

aimed at luring private investors to resuscitate the bank," said a source in the

5-Stars Movement, one of two governing coalition parties. "No public money will

go into rescuing this bank."

     The state guarantees would need to be approved by the European Commission

and European Central Bank in the next couple of weeks, added a source within the

League, the coalition's other party.

     Only if all private market options fail would Rome step in with a

"temporary" nationalization plan for Carige, with bridge financing of up to E4

billion. The public rescue, explained the sources, would be earmarked as an

"exceptional spending", and would thus be outside the current 2019 budget plan.

     The risk of breaching the EU's BRRD banking regulations or rules against

state aid, does not concern the government: "We would be asking for the state

aid "exception" with the excuse that Carige's potential default could

destabilize Italy's whole financial sector", said the League source.

     "We're not interested in creating national banks, we already have the

southern public lender in charge of local economic support. Nationalization is

not in our agenda but we must keep it as a potential plan B," he added.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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