Un-popular measures

25 October 2010 By Nicholas Paisner

Italy’s seventh largest bank is raising 2 bln euros over two thirds of its market cap to repay government funds and boost capital. Italy’s big two UniCredit and Intesa shunned state money. But with less capital than peers, their shareholders also have cause for concern.

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Banco Popolare said on Oct. 24 that it would raise up to 2 billion euros through a capital increase.

The bank said that it would use the proceeds to repay government capital, known as "Tremonti bonds" and comply with new regulatory requirements.

Popolare said that the capital increase would strengthen its capital ratios by 2.16 percentage points. The bank had a core Tier 1 ratio of 6.1 percent as of June 2010.

The shares were down 4.25 percent by 1100 GMT on Oct. 25.

Popolare's market capitalisation, based on its closing price on Oct. 22, was 2.75 billion euros.

UniCredit and Intesa Sanpaolo had core Tier 1 ratios of 8.4 and 7.7 percent, respectively, at the end of June 2010.

Banca Monte dei Paschi di Siena on Oct. 25 repeated that it had no plans for a capital increase.

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