By Emilio Parodi and Valentina Za
MILAN (Reuters) -Banca Progetto, a small Italian bank which investment firm Oaktree recently agreed to sell to Centerbridge, has been placed under court administration for allegedly lending money to a person arrested under mafia charges, a court document showed.
Banca Progetto confirmed in a statement it would work with court-appointed administrator Donato Maria Pezzuto to ensure its internal controls are adequate following a criminal probe in Milan which does not target the bank but involves 10 loans granted by it.
Progetto CEO Paolo Fiorentino told a press conference he “did not like the measure”, but said the bank would support Pezzuto to expedite checks on its control system.
California-based Oaktree Capital Management first invested in Banca Progetto in 2015, and after looking for years to exit the investment struck a binding deal with Centerbridge Partners in September.
The deal has not closed yet and Fiorentino said it would become clear in the coming days whether it could go ahead.
Centerbridge, Oaktree, and its advisers Morgan Stanley and White & Case all declined to comment.
“The bank wishes to reassure its clients and stakeholders that it will continue to operate normally,” Progetto said.
Courts appoint temporary administrators to help companies fix shortfalls while continuing to operate. The move is a safety measure with no punitive intent first developed by Milan magistrates to clean up companies infiltrated by the mafia.
According to the court document, of which Reuters obtained a copy, Banca Progetto lent 10 million euros ($10.8 million) between 2019 and 2023 to a number of companies linked to a person who was arrested for mafia charges in 2023.
Prosecutors allege the bank granted the financing, which was guaranteed by the Italian state, without conducting the necessary checks on the borrower.
The document added that the Bank of Italy had conducted an on-site audit between late 2021 and early 2022, fining Banca Progetto for failures in the vetting of clients who had borrowed state-backed funds.
Asked about the audit, Fiorentino said Progetto was still on a learning curve at the time, having started operating in 2019. It has paid the 100,000-euro fine and complied with suggestions from the regulator to improve its procedures, he added.
In Italy small businesses, which are the majority, access credit mostly through a system of state guarantees, and Banca Progetto specialises in state-guaranteed financing.
“Many banks shun the small and medium enterprises we serve,” Fiorentino said.
($1 = 0.9254 euros)
(Reporting by Emilio Parodi; Additional reporting and writing by Valentina Za; Editing by Gianluca Semeraro, Mark Potter and David Evans)
