EU backs extension of Italian recapitalisation

BRUSSELS Oct 6 (Reuters) - The European Commission on Tuesday approved the extension of an Italian recapitalisation scheme for credit institutions until the end of the year.

The scheme, initially approved in December 2008 with a budget of around 15-20 billion euros ($22-$29 billion), allows the Italian government to subscribe subordinated debt instruments, to be counted as bank core tier 1 capital.

"The Commission found the prolongation of the measures to be in line with its guidance on support measures for banks during the financial crisis," the European Union's executive arm said in a statement.

The scheme was modified in February to allow the state to take part in recapitalisations if there is a participation of at least 30 percent of private investors and on equal terms. (Reporting by Bate Felix; Editing by Dale Hudson)