Rome to inject 10-15 bn euros into banks

The Italian government plans to spend between $12.8-19.2 bn to shore up the liquidity of top banks, Italy's leading daily reported today.     

The funds, in the form of perpetual convertible bonds, will go to about 10 banks including UniCredit, Intesa Sanpaolo, Banca Monte dei Paschi di Siena (BMPS), Banco Popolare and Banca Popolare di Milano, the Corriere della Sera said.     

The coupon, or yield signalled on the bond, will be between eight and nine per cent.     

The move is intended to help the banks maintain or attain a Core Tier 1 ratio of eight per cent, said Corriere, referring to the ratio of a bank's core equity capital to its total risk-weighted assets.     
Corriere did not say when the move would be announced, adding that some technical details remained to be ironed out.     

Italian Prime Minister Silvio Berlusconi said on Wednesday that a plan to support the banks, mooted two weeks ago, would be adopted next week.
     
While the conservative leader did not wish to state the amount envisaged, Britain's Financial Times said it could total as much as 30 billion euros.     

Berlusconi's centre-right government has said repeatedly that Italy's mainly retail banking system is robust since the banks are less exposed to the global credit crisis, but in the long run they may have weaker Core Tier 1 ratios than their rivals elsewhere in Europe.     

UniCredit, exposed notably in Germany, announced a capital increase of nearly seven billion euros to boost its solvency in early October.