Italy's banks hope for capital boost from cenbank stakes in 2013

ROME Mon Nov 25, 2013 7:56am EST

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ROME Nov 25 (Reuters) - Italy's banks want the country's central bank to press ahead with an upward revaluation of its share capital as long as they can declare their own stakes in the bank as regulatory capital in their 2013 accounts, the head of banking lobby ABI said.

The Bank of Italy is raising the value of its share capital to as much as 7.5 billion euros ($10 billion) from 156,000 euros at present as a way of reaping more tax revenue for the state and helping stretched lenders shore up their own finances.

At present, the Bank of Italy does not allow commercial banks to count their stakes as regulatory capital, but this is expected to change once the revaluation is complete and the stakes become assets for sale.

The central bank has hired advisers to re-assess its value, which has been frozen since the 1930s.

The panel of independent experts has said it could be worth between 5 billion and 7.5 billion euros based on the net present values of future dividends. It also suggested a less concentrated ownership structure.

The government expects to reap 1.2 billion euros in capital gains taxes from the banks when the value of their stakes grows.

"If by December they recognise the capital boost then I can recognise the tax impact," ABI President Antonio Patuelli told a seminar at the weekend. "The time is ripe for this operation, which should produce its effects by New Year's Eve."

The Treasury initially expected the revaluation to affect bank capital and tax revenue only from 2014. If it is brought forward, the banks will be able to include its effects in balance sheet data that the European Central Bank will use in an upcoming health check of the industry.

Italy's government is set to meet on Tuesday to discuss a legal decree allowing the capital revaluation.

Patuelli said the banking industry expected a tax rate of 16 percent and a 5 percent ownership cap on the central bank's stakes held by lenders, which would force some banks to reduce their holdings.

Italy's top two lenders, Intesa Sanpaolo and UniCredit, own 42 percent and 22 percent respectively.

"I have reason to be confident the decree will include the revaluation so that the stakes become attractive and sellable to (banking) foundations and other parties under national supervision," Patuelli said.

Financial daily Il Sole 24 Ore reported that the central bank may buy out some of the stakes held by the banks as a temporary arrangement before a proper market for such assets develops.

The approval of the decree, initially due last week, has been postponed as the European Central Bank must first give a green light. ($1 = 0.7394 euros) (Reporting by Giselda Vagnoni; writing by Valentina Za; editing by Tom Pfeiffer)

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