December 16, 2016 / 7:40 PM / a year ago

REFILE-Veneto Banca says ECB demands higher liquidity ratio, bad loan sale

(Fixes typo)

MILAN, Dec 16 (Reuters) - Italy’s Veneto Banca said on Friday the European Central Bank had lifted the minimum requirement for a key liquidity indicator at the regional bank and asked it to cut its problem loans.

Veneto Banca is discussing a merger with rival Popolare di Vicenza after both lenders were rescued by state-sponsored bank bailout fund Atlante this year to avoid being wound down.

The two banks are one of the main problem spots in Italy’s slow-burning banking crisis.

Echoing a similar statement published earlier on Friday by Popolare di Vicenza, Veneto Banca said the ECB had asked for a new strategy plan, measures to lower bad loans, and that it keep a 10 percentage point buffer over the minimum liquidity coverage ratio.

Veneto Banca and Popolare di Vicenza both warned their capital ratio at end-2016 may suffer due to balance sheet reviews they were carrying out in tough market conditions.

Reporting by Valentina Za

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