MILAN, Oct 3 (Reuters) - Italy's Banca Popolare di Milano
Massimo Ponzellini defended the bank's decision to take up
500 million euros in state-backed bonds after this week's
decisions by UniCredit
"We have issued them for 500 million euros and they (the cash) are due to arrive. If we use them only for capital then we will reach a Core Tier 1 of 7.96 percent," he said in the interview in Corriere della Sera.
"But perhaps it will be lower because in part we will use them to increase lending by 2.4 billion euros," he said without giving further details.
Earlier this week, Popolare di Milano said the state bonds would add 1.5 percentage points to Core Tier 1 capital raising this ratio to 7.96 percent, based on end-June data.
Other banks have decided against the state bonds because of conditions on dividends, management bonuses and requirements to make loans to customers.
On lending, Ponzellini said Popolare Milano is ready to offer 2 million euros in loans for each 1 million euros repatriated by companies from abroad under the government's planned tax amnesty.
To repay the state bonds, the bank is issuing 700 million euros of convertible bonds paying 6.50 percent interest that will convert into shares when the state-bonds mature, he said.
The convertible bonds will be negotiable via Pop Milano's investment unit Banca Akros and not on the regulated market, he said.
On Friday, the bank said 36.6 percent of the bonds have already been subscribed with further periods of subscription up to the end of 2009 still to take place.
(Writing by Nigel Tutt; Editing by Sanjeev Miglani)