MILAN, May 23 (Reuters) - Italian mid-sized bank Credito Valtellinese (Creval) said it would repay ahead of time 500 million euros ($682 million) in state-guaranteed bonds it issued at the height of the euro zone crisis, in a sign of its improved funding position.
Creval said in a statement on Friday the early repayment would allow it to save money on fees starting from the second quarter of the year and still leave it with a net 3.7 billion euros in assets it could use to borrow from the European Central Bank (ECB).
The bank still has 1 billion euros of bonds guaranteed by the state, which will mature in January 2015.
In December 2011, when the crisis had shut Italian banks out of international capital markets, the government provided a state guarantee on bank bonds so that lenders could use them as assets to borrow from the ECB at two extraordinary liquidity tenders in late 2011 and early 2012.
With funding conditions improved after the crisis receded, some Italian banks have been repaying the emergency loans from the ECB and reimbursing the state-backed bonds.
Italy's biggest bank by assets UniCredit said last week it would cancel 10 billion euros in state-guaranteed bonds.
$1 = 0.7336 Euros Reporting by Valentina Za; Editing by Mark Potter