BPM aims for cap hike, new governance by year-end

MILAN (Reuters) - Italian mutual bank Banca Popolare di Milano (BPM) (PMII.MI) is looking to carry out a planned capital increase by the end of 2011 when it switches to a two-board system to boost management powers.

In a statement at the end of a board meeting on Tuesday, the bank also denied media reports about the arrival of new investors and managers, which had sent shares sharply higher in the session.

The Italian press had speculated that the switch to a dual governance model would pave the way for Italian banker Matteo Arpe to buy a stake in the bank and take on a managerial role.

"Concerning reports about possible consortiums of institutional investors or the arrival of new managers/shareholders, the board says these are, as far as it knows, groundless," the bank said.

Shares in BPM closed up 8.4 percent on Tuesday, leading gains on Italy's blue-chip stock index .FTMIB.

The new governance will "clearly separate management from shareholders' control," BPM said.

A source close to the bank clarified the new system would entail both a management and a supervisory board.

After an inspection at the bank earlier this year, Italy's central bank had criticized the excessive influence BPM's employee shareholders held over the mutual bank's strategy.

In June, shareholders had rejected a change of governance sought by the Bank of Italy.

The board now aims to approve the new system by the end of September and implement it by year-end, BPM said.

By the end of 2011 BPM also plans to carry out a capital increase, which a banking source on Tuesday said would total around 900 million euros ($1.23 billion), confirming reports in the Italian media.

Pop Milano's market value has halved since the start of the year to around 500 million euros.

Italian authorities have urged domestic lenders to boost their capital base and banks have already raised 11 billion euros in fresh capital this year.

UniCredit (CRDI.MI) is the only large Italian bank to stay out of the latest round of capital increases.

Two sources close to the matter said UniCredit's Chief Executive Federico Ghizzoni discussed various capital boosting measures, including a possible cash call, at a meeting of the bank's strategic committee on Tuesday. ($1 = 0.731 Euros)

(Reporting by Antonella Ciancio and Valentina Za; Additional reporting by Andrea Mandala and Gianluca Semeraro in Milan and Paolo Biondi in Rome; editing by Luca Trogni, Bernard Orr)