MILAN May 23 Italy's Banca Popolare di Milano (BPM) has raised 497 million euros ($677 million) through the sale of new shares, meeting regulatory demands to boost its capital base.
BPM, which repaid 500 million euros in state aid a year ago and is one of 15 Italian lenders targeted by a health check of euro zone lenders by the European Central Bank before it takes over supervision of the sector in November, said the rights issue completed on Friday was 99.5 percent subscribed.
Nine of the 15 lenders are planning to tap investors for cash for a total of nearly 11 billion euros. BPM's cash call came after larger rival Banco Popolare successfully completed a 1.5 billion euro rights issue last month.
A 400 million euro share sale by Credito Valtellinese starts on Monday, but all eyes are on Italy's third-largest bank, Monte dei Paschi di Siena, which is planning to raise 5 billion euros next month.
BPM has estimated that its rights issue would add 1.3 percentage points to its best-quality Common Equity Tier 1 capital, which stood at 7.3 percent of risk-weighted assets at the end of March. That was still short of an 8 percent threshold set by the ECB in its review.
The bank's two biggest shareholders before the rights issue were Italian investor Raffaele Mincione with a 7 percent stake, held through a fund called Athena Capital, and U.S. investment fund BlackRock with just over 5 percent.
After a 2011 audit of BPM that unveiled excessive exposure to real estate among other issues, the Bank of Italy forced it to apply larger risk-weightings than peers to calculate the capital ratios that measure financial strength.
Chief Executive Giuseppe Castagna said in May that the bank would start talks with the regulator after completing the rights issue, seeking to drop the extra risk-weightings. The capital increase "is a first step on a road map that we will pursue with great commitment", he said on Friday. ($1 = 0.7336 Euros) (Reporting by Valentina Za; Editing by David Goodman)