Bank of Italy revaluation seen boosting banks' capital
MILAN Oct 4 (Reuters) - An expected massive revaluation of Bank of Italy's shares held by hard-pressed domestic lenders would likely boost their capital and help them strengthen their balance sheets in the face of mounting bad loans.
Italy's central bank is preparing to revalue its share capital, stuck at a value of 156,000 euros set in 1936. The Treasury estimated in a document obtained by Reuters that figure could be raised to as much as 7 billion euros ($9.5 billion).
Capital-starved Italian lenders have been lobbying for a revaluation of the stakes they hold in the central bank in order to be able to book a capital gain.
At present, the Bank of Italy does not allow banks to count the stakes towards their regulatory capital, but this stance is expected to change once the revaluation is complete.
"When new values for the stakes are set, one could think they'd be tradable and on the basis of that banks would likely be able to book them as capital," a financial source close to the matter said.
Lender Intesa Sanpaolo is the largest shareholder in the Bank of Italy with total group stake of 42 percent.
UniCredit has 22 percent of the central bank and Monte dei Paschi di Siena, which has been told by European authorities to raise 2.5 billion euros in fresh capital, owns 2.5 percent.
Reuters calculations show that a revaluation of the capital to 7 billion euros could boost Intesa Sanpaolo's Core Tier 1 ratio by a percentage point to 12.27 percent if the capital gains were to fully feed into the bank's quality capital.
UniCredit could see its Core Tier 1 ratio, a measure of financial strength, raise by 38 basis points to 11.79 percent.
Some analysts have questioned the wisdom of letting banks include the revalued stakes among their assets available for sale as it would be difficult to find a buyer for them if the lenders were liquidated.
The Bank of Italy has asked a committee of experts to assess the value of its capital and their estimate is expected by the end of the year. The European Central Bank must be consulted before the central bank can proceed with a capital increase.
The Treasury said in the document that lenders would likely revalue their stakes when approving 2013 results.
($1 = 0.7340 euros) (Reporting by Stefano Bernabei, Valentina Za and Giuseppe Fonte, additional reporting by Lisa Jucca, writing by Valentina Za; editing by David Evans)
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