Italy's Banca Progetto placed under court administration
Measure stems from criminal probe which does not target bank
Prosecutors allege shortfalls in loan approval procedures
Oaktree, Centerbridge signed binding deal in September
Adds detail from Banca Progetto statement in paragraphs 2-3, 6-7; on deal in paragraphs 3-4
By Emilio Parodi
MILAN, Oct 24 (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 control system is adequate following a criminal probe in Milan.
The probe doesn't target Banca Progetto but involves 10 loans granted by it, out of a total of 40,000 currently in place, the bank said.
Oaktree Capital Management, headquartered in Los Angeles, had first invested in Banca Progetto in 2015. After looking for years into a possible sale and also exploring a potential market listing to exit the investment, it struck a binding deal with Centerbridge Partners in September.
The deal has not closed yet, two people with knowledge of the matter said. Reuters could not establish how the court administration could affect it.
Oaktree and Centerbridge had no immediate comment.
"The bank wishes to reassure its clients and stakeholders that it will continue to operate normally through its internal bodies and structures," Progetto said.
In recent months Milan judges appointed court administrators also at two companies which are part of, respectively, the Armani and LVMH LVMH.PA groups amid probes into alleged worker exploitation at some of their suppliers.
The court appoints a temporary administrator to help a company fix shortfalls while continuing to operate. Under such procedure, no charges are laid against the company.
The court administration of a company is a safety measure with no punitive intent, which was first developed by Milan magistrates to clean up companies infiltrated by the mafia.
Prosecutors allege Banca Progetto granted the financing, which was guaranteed by the Italian state, without conducting the necessary checks on the borrower, the document of which Reuters obtained a copy showed.
Between 2019 and 2023, Banca Progetto lent 10 million euros to a number of companies linked to a person who was arrested for mafia charges in 2023.
"The financing was granted in a superficial and gullible manner, foregoing basic requirements to screen loan applications," the document said.
It added 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 borrowed state-backed funds.
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.
Reporting by Emilio Parodi; Writing by Valentina Za; Editing by Gianluca Semeraro, Mark Potter and David Evans
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