UPDATE 1-Banca Etruria says to seek merger with another lender
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MILAN Dec 13 (Reuters) - The board of Italy's Banca Etruria has decided as soon as possible to launch a process to merge with another bank, the mid-sized lender said.
The bank's board met on Friday to adopt necessary measures to respond to the results of an inspection by the Bank of Italy. Earlier this week, Banca Etruria had said doubtful loans were nearly a third of the total in gross terms at the end of September.
"The board of directors has decided ... that it becomes critical to start as soon as possible and finish in a short time the necessary steps to define the process of integration and/or aggregation with a banking group of high standing," the lender said in a statement.
It added that such a deal should not affect jobs.
Italy's central bank has tightened up oversight of domestic banks ahead of a sector check-up by the European Central Bank next year, including on-site inspections in which it has looked in detail at banks' loan books.
The lender added on Friday that the Bank of Italy had asked it for additional loan provisions of around 80 million euros ($110 million).
The central bank also asked the lender to prepare a plan to lower the holding of government bonds in its portfolio and to reduce trading in these securities to limit the market liquidity risk, Banca Etruria added. ($1 = 0.7283 euros) (Reporting by Agnieszka Flak; editing by Jane Baird and Anthony Barker)
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