STOCKS NEWS EUROPE-Banco Popolare up on bond plans

Shares in Italy's Banco Popolare (BAPO.MI) are outperforming the sector after the bank proposes issuance of a bond which will help boost its capital ratios.

On Monday Banco Popolare said it would propose issuing soft mandatory convertible notes of up to 1 billion euros ($1.49 billion) aimed at boosting its core Tier 1 ratio to over 7 percent. [ID:nGEE5AM2JJ]

"The issue of these notes gives high financial flexibility to the bank as it supports the business in the short term and is regularly convertible into share capital at the company's discretion," says broker Banca Akros in a note.

According to Milan broker Equita, the notes will give the bank more time to find a buyer for non-core assets it is selling, avoiding any risk of a fire sale.

Shares in Banca Italease (BIL.MI), 88 percent controlled by Banco Popolare, are also higher.

On Monday Italease gave details of its 1.2 billion euro rights issue which, according to Banca Akros, offers shares at a discount of around 65 percent to Monday prices.

At 1122 GMT shares in Banco Popolare are up 1 percent at 6.06 euros while Italease shares are up 3.69 percent at 2.11 euros. The DJ Stox banking index .SX7P is down 0.73 percent.

Reuters Messaging rm://stephen.jewkes.reuters.com@reuters.net ($1=.6708 Euro)