ECB tells Monte dei Paschi to boost capital for bad loan deal-sources

The European Central Bank has told troubled Italian lender Banca Monte dei Paschi di Siena to strengthen its capital base by around 700 million euros ($814.45 million) to allow a planned spin-off of its bad loans portfolio, two sources close to the matter said on Friday.

ROME, July 24 (Reuters) - The European Central Bank has told troubled Italian lender Banca Monte dei Paschi di Siena BMPS.MI to strengthen its capital base by around 700 million euros ($814.45 million) to allow a planned spin-off of its bad loans portfolio, two sources close to the matter said on Friday.

The ECB, Monte dei Paschi and the Italian Treasury, which controls the bank, all declined to comment. The news was first reported by daily newspaper La Repubblica.

Monte dei Paschi last month approved a plan to offload more than 8 billion euros in bad and unlikely-to-pay loans to state-owned bad loan manager AMCO, in a move that could make it more attractive for a possible re-privatisation. .

The plan also included more than 1 billion euros in equity and 3.2 billion euros in debt from bridge loans granted by JPMorgan and UBS.

(Reporting by Giuseppe Fonte and Gianluca Semeraro; additional reporting by Francesco Canepa in Frankfurt, Stefano Bernabei in Rome; writing by James MacKenzie)

((giulio.piovaccari@thomsonreuters.com; +39 02 6612 9743; Reuters Messaging: giulio.piovaccari.thomsonreuters.com@reuters.net))

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