Italy's Intesa Sanpaolo to "reprice" loans-exec

By Giuseppe Fonte

ROME, Nov 21 (Reuters) - Intesa Sanpaolo SpA (ISP.MI) plans a "strong repricing" of loans to customers who are not paying sufficiently for the risk taken on by the bank, according to a letter from Managing Director Pietro Modiano seen by Reuters.

In the letter, sent to Intesa Sanpaolo branches in early October, Modiano said the repricing of loans is required so the bank can meet its latest business plan targets.

"Our interest rates and those of our competitors are, in many cases, at levels below those necessary to remunerate the capital, the risks and the costs," the letter said.

The loans to be repriced are across all categories of customers but are largely in the "medium-sized" sector, he said, referring to loans to companies and individuals.

Modiano said in the letter Intesa Sanpaolo had struggled to recover the increased cost of funding which banks are having to pay because of the financial crisis.

The latest policy stems from the fact that in the last few years, loans have been too cheap, the letter said.

Banks worldwide are tightening lending policies in order to cope with the financial crisis which has hit their margins. Governments are increasingly concerned about cuts in lending to small and medium companies, which can be key drivers for economies.

Nobody at Intesa Sanpaolo was immediately available for comment.

(Reporting by Giuseppe Fonte; Writing by Nigel Tutt; Editing by David Holmes)