Berlusconi to meet Italian banks as market awaits funds
ROME (Reuters) - Italy's prime minister Silvio Berlusconi will meet banks and industry on Thursday ahead of a cabinet meeting on Friday as newspapers outline how the government could implement emergency measures to support banks.
Berlusconi said on Wednesday support would come without penalties for managers in an apparent effort to achieve agreement on how to bring banks' capitalisation in line with the other European countries.
"If the banks themselves ask (for help), the government is ready to assist them without punitive conditions for management or for shareholders," Berlusconi said on the sidelines of a business conference.
Treasury Minister Giulio Tremonti has previously said "no one is interested in saving the bankers. (The interest) is in saving investors and financing for business."
The banking system is still waiting for details of how the government intends to implement emergency measures it has agreed on Oct. 9 to support banks when it said only it might enter the capital with non-voting shares.
The centre-right government called a cabinet meeting for Friday. Berlusconi will meet bank and firms representatives on Thursday to study measures aimed at boosting economic growth.
"We will see. We will see, we are working on that," Berlusconi told reporters who asked if new measures for the banks would be approved by the end of the week.
The cabinet passed a decree earlier this month allowing the government to provide capital to banks in return for non-voting shares but has yet to give details on how this would work.
Banks have been quick to deny they need any help and the only one to seek extra funds so far -- UniCredit (CRDI.MI) -- has found all of its 6.6 billion euros of additional cash from investors.
ITALIAN BANKS' CAPITAL LAGGING
Financial markets have worsened sharply in recent weeks and other European governments have already stepped in to shore up the capital of their banks, leaving Italian lenders lagging.
Their Core Tier 1 ratios -- which measure the amount of capital a bank has against its risky assets -- are around 6 percent compared with 8 percent and more elsewhere in Europe.
That has raised concerns Italy's banks might look at cutting back on lending, especially to business, with a consequent impact on the already sputtering economy.
Berlusconi said on Wednesday he had proposed "at an international level" measures to ensure banks maintain their levels of lending to business, adding that France had suggested they should even increase it by 2-4 percent.
He said on Tuesday the government might have to review its budget plans for 2009 because of the global financial crisis.
Newspapers on Wednesday said the government and the Bank of Italy were discussing how to implement the emergency measures and that a decision could come by the end of this week.
Though Italian regulators and officials have repeatedly said the country's banking system remains solid, an Italian panel examining the crisis has said banks face hurdles due to tensions in the interbank market and sharp stock market volatility.
Banks are unwilling to risk the stigma of asking for help but so far the government has said requests must be made individually. The tough line on management has also been a deterrent and La Repubblica newspaper said on Wednesday the central bank was unwilling to point the finger itself.
La Repubblica added that options for getting extra funds into banks might include the Bank of Italy taking stakes in a swap with its leading bank shareholders, or the Treasury could buy the stakes they hold in the central bank.
Il Sole 24 Ore newspaper said state intervention could be in a long-term bond, possibly a hybrid with an equity component.
"The state may buy convertible bonds, saving ...shares that may be converted into capital at the banks' request" Berlusconi said on Wednesday without adding details.
(Reporting by Francesca Piscioneri, writing by Deepa Babington and Jo Winterbottom, editing by Mike Peacock and Hans Peters)
