Italy May Support Banks by Buying Hybrid Debt, Il Sole Reports

By Elisa Martinuzzi

Oct. 25 (Bloomberg) -- Italy, which has pledged funds to prevent the collapse of struggling banks, may buy so-called hybrid debt securities from lenders to help boost their capital ratios, Il Sole 24 Ore reported, without saying where it got the information.

The investments would enable banks to boost their Tier 1 ratios, while protecting their dividends, and the government wouldn't become a shareholder, Il Sole said.

A meeting of Italy's financial stability committee, which includes the Treasury, the Bank of Italy, securities watchdog Consob and insurance regulator Isvap, is planned for Oct. 28, a government official told Bloomberg today. The official declined to comment on plans to fund banks.

To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net