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Italian Lenders Want Valuation of Central Bank Stakes Boosted

Aug. 14 (Bloomberg) -- Italy’s banking lobby vice chairman, Giovanni Berneschi, is urging the government to review the Bank of Italy’s equity as a way of boosting their own capital.

The Bank of Italy, which is owned by domestic lenders, is now valued at a symbolic 156,000 euros ($193,000), and may be worth as much as 10 billion euros, or about half of the Rome-based central bank’s assets, Berneschi said. Raising the equity of the country’s central bank would help lenders that need capital by boosting the value of their stakes.

“Today more than ever an adequate evaluation of the Bank of Italy’s net worth is necessary, in the light of the introduction of stricter European rules that will require higher capital levels,” Berneschi, who’s also chairman of Banca Carige SpA, a Genoa, Italy-based bank, said in e-mailed answers to questions. Increasing the valuation of the central bank is a way of giving an “adequate value” to investments originally made in 1936, the banker said.

Italy’s five biggest banks have a 10 percent core Tier 1 ratio on average, compared with an average 8.7 percent for other Italian lenders, Bank of Italy Governor Ignazio Visco said in a speech July 11.

Raising the equity value of the Italian central bank through a free stock issue would allow banks to boost capital by 8 billion euros to 8.5 billion euros, net of taxes, Berneschi said. Banca Carige, which owns about a 4 percent stake in the central bank, would have its capital increased by as much as 340 million euros if the central bank carried out the plan.

The Bank of Italy’s stakes held by domestic lenders has raised questions about the central bank’s independence for several years. In 2005 the Italian government approved legislation requiring lenders to sell their stakes in the central bank within three years, though it was never implemented because rules governing the disposals weren’t adopted.

“The dialogue with the government is always open,” Visco told newspaper la Repubblica in an interview published Aug. 5. “The issue must be resolved.”

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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