Italy's newly created backstop fund for banks, Atlante, is set to buy a stake of around 92% in Banca Popolare di Vicenza SpA after investors shunned the troubled lender's cash call, but could end up owning roughly the total of Vicenza's capital.

The bank said in a statement late on Saturday that investors placed orders for only 7.7% of the €1.5 billion ($1.72 billion) of new shares the bank put up for sale in an initial public offering imposed by the European Central Bank, which found Vicenza short of regulatory capital last year.

Atlante pledged to buy Vicenza's unsold shares, replacing UniCredit SpA, which was the initial underwriter of the transaction.

The fund, which has a total war-chest of €4.25 billion, is meant to back capital increases at Italian banks imposed by regulators by buying all shares that remain unsold.

It also plans to buy bad loans from Italian banks at higher prices than normally offered by investors in a bid to kick-start a market for these assets and help lenders get rid of soured loans.

At this stage, Vicenza may not have enough free-float capital to receive clearance from Italy's stock exchange to start listing next week.

According to the Italian bourse rules, a company needs to have at least 25% in free-float capital to be given a green light to list, but the exchange can make exceptions. Vicenza planned to start listing next week.

If Vicenza doesn't obtain authorization from the stock exchange to list, the orders placed by investors will be invalid and Atlante will underwrite the whole €1.5 billion rights issue, Vicenza said, ending up owning 99.3% of the bank's capital.

A person familiar with the matter said Mediobanca SpA, which is part of the pool of banks coordinating the sale, placed orders for around 5% of the shares. Mediobanca declined to comment.

On Monday, the Italian exchange is set to decide if there is enough free- float for the bank to start listing.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

May 01, 2016 21:05 ET (01:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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