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EU body tells Italy’s Veneto banks to raise further capital

A sign of the Banca Popolare di Vicenza in Rome, Italy. Photo: Reuters

A sign of the Banca Popolare di Vicenza in Rome, Italy. Photo: Reuters

EU Competition authorities have asked Italian banks Popolare di Vicenza and Veneto Banca to raise €1 billion in private capital as a condition to approve their request for state aid, a source close to the matter said yesterday.

Several sources said earlier this week that the two Veneto-based lenders could not use taxpayer money to cover expected loan losses, raising the prospect healthier rivals may have to once again provide fresh capital to help them.

The two banks must fill a €6.4 billion capital shortfall identified by the European Central Bank and have turned to the state for help under rules that allow a government to cover losses a lender may face under a shock scenario.

Confirming a press report in Il Sole 24 Ore yesterday, the source added that the two banks would need an additional €1 billion in private capital.

This would be on top of the private contribution already envisaged under their rescue scheme through a debt-to-equity conversion and funds pumped in by their controlling shareholder bailout fund Atlante.

The two banks declined to comment.

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