MPS submits capital plan to ECB (2)

(ANSA) - Milan, July 26 - Monte dei Paschi di Siena (MPS) lender on Tuesday sent its capital plan to the European Central Bank (ECB) for approval, sources close to the operation told ANSA Tuesday. The plan calls for a five-billion-euro capital increase and the securitization of 10 billion euros' worth of non-performing loans (NPLs) with help from Italy's private Atlante fund that was set up by the financial industry earlier this year to shore up banks burdened by toxic loans and circumvent EU rules against public aid.
    The ECB is expected to respond by Friday, the sources said.
    The ECB's banking oversight committee meets tomorrow in Frankfurt.
    "We are confident there will be a market solution... I hope there will be no State intervention," spending-review commissioner and government economic adviser Yoram Gutgeld said earlier in the day.
    The market solution would involve an initial phase in which MPS would get rid of some of its NPLs, followed by a recapitalization. Shares in the troubled lender were suspended on excessive volatility in Tuesday trading after tanking 8% to 0.28 euros Monday. The lender is set for the outcome of an ECB stress test and the release of its half-yearly results on Friday.