Italian bank shares fell sharply today after UBI Banca announced an unexpected €1 billion capital increase ahead of new global capital rules and bank stress tests next month.
Following calls from Bank of Italy governor Mario Braghi for Italian banks to boost their core capital, the country's fifth largest bank said it would raise its core tier one ratio to 8.1%, from 6.95% at the end of 2010. The increase will take place before the summer, it said.
UBI Banca head Victor Massiah said the decision to raise the capital had been taken independently, without pressure from the Bank of Italy, in order to bring it into line with Basel III rules.
Analysts said the Banca Popolare di Milano (BPM) could decide to raise its capital from €500m to €600m, though a spokesman at the Milanese bank refused to comment.
The banks most likely to raise their capital are BPM, Banca Monte dei Paschi di Siena (BMPS) and even Intesa Sanpaolo, Italy's second largest bank, analysts said.
UniCredit may also come under pressure to follow suit if European regulators in June decide it is a strategically important financial institution, they added.
