UPDATE 1-Banco Popolare launches 2 bln euro cap increase

* Rights issue could be carried out in Q1 2011

* New capital to boost ratios, reimburse govt-backed bonds

* Will raise capital ratios by 216 basis points

* Issue guaranteed by bank consortium
(Adds details, background)

MILAN, Oct 24 (BestGrowthStock) – Italy’s Banco Popolare (BAPO.MI: )
on Sunday approved the launch of a capital increase of up to 2
billion euros to boost its capital ratios, reimburse
government-backed bonds, and to support lending.

Managing and supervisory boards approved the capital
increase, in the form of a rights issue, which will boost its
capital ratios by 216 basis points. The issue could be carried
out in the first quarter of 2011, it said.

“The mandate to the bank has sufficient flexibility to deal
with the demands of strengthening capital while taking account
of sales of non-core assets,” it said.

In recent weeks, the bank had denied that it was
discussing a capital increase and said it was selling assets.
At the end of September, it denied a newspaper report on a 2
billion euros share offering. [ID:nLDE68S0K3]

The market capitalisation of Banco Popolare is about 2.8
billion euros, making it the seventh-largest bank in Italy.

In July, the bank passed the EU’s stress test with 7.4
percent Tier 1 capital ratio at end 2011 under the adverse
scenario and down to 7.0 percent with the additional sovereign
risk. At the end of June 2010, Tier 1 was 7.6 percent.

In 2009, Banco Popolare was one of only four Italian banks
to seek government-backed bonds — so-called Tremonti bonds
after Italy’s economy minister — to shore up its capital
issuing 1.450 billion euros of these bonds.

The latest 2 billion euro issue will be guaranteed by a
bank consortium in which Mediobanca (MDBI.MI: ) and Bank of
America Merrill Lynch (BAC.N: ) are global coordinators, the bank
said.

Book-runners are Credit Suisse (CSGN.VX: ), Goldman Sachs
(GS.N: ) and Deutsche Bank (DBKGn.DE: ), it said.

The increase is subject to approval by shareholders at a
meeting likely to take place in December, it said.
(Writing by Nigel Tutt, editing by Maureen Bavdek)

UPDATE 1-Banco Popolare launches 2 bln euro cap increase