MILAN (AFP) — Libya has become the second biggest stakeholder in Italy's leading bank UniCredit as foreign investors show renewed interest in troubled Western banks amid the global financial crisis.
The investment of nearly 1.5 billion euros (2.0 billion dollars), based on UniCredit's stock market capitalisation, boosted the share price 4.5 percent as of 3:00 pm (1300 GMT).
UniCredit shares had plunged on Thursday, closing 13.08 percent down.
The new money was put up by Libya's Central Bank and two other public investors, the Libyan Investment Authority and the Libyan Foreign Bank, giving them a combined 4.23 percent stake.
The north African country, a former Italian colony, has had a 0.89 percent stake since 1997, acquired mainly when UniCredit absorbed Banca di Roma, inheriting the holding of the Libyan Foreign Bank.
Oil-rich Libya is now the second biggest shareholder in UniCredit after the Cassa di Risparmio di Verona foundation, with 5.0 percent.
Libya's entry into UniCredit coincided with an injection of more than six billion euros into Switzerland's Credit Suisse by Qatar Holding LLC.
The International Monetary Fund estimated in March that foreign funds totalling more than 40 billion dollars had flooded into European and American banks since November 2007.
Most notably, Abu Dhabi helped bail out US banking giant Citigroup with a 7.5-billion-dollar cash infusion late last year.
UniCredit is now capitalised at 33 billion euros, including the new Libyan injection.
Hard hit by financial sector turmoil that has swept through Europe, UniCredit earlier this month announced a two-stage capital increase of more than 6.0 billion euros.
Wooed by UniCredit, the three Libyan entities pledged to be "long-term shareholders" and noted that they had agreed to take part in a capital increase announced early this month by UniCredit "up to a sum of 500 million euros."
The Libyans did not wait for the planned launch of the capital boost in December or January before showing their interest.
This operation "demonstrates their interest in our bank but also that they consider it to be a very good enterprise," UniCredit CEO Alessandro Profumo told the ANSA news agency.
A spokesman described the investment as "friendly" and said it would not come with a spot on the board of directors.
He declined to say how large a sum UniCredit had sought.
UniCredit announced in early October that it would boost its capital by nearly seven billion euros, lowering its profit targets at the same time.
Italy's leading bank also accepted a loan from the Bank of Italy in the form of state securities, Profumo acknowledged on Friday, without stating the amount.
The central bank put up a total of 1.9 billion euros to a number of banks in what was termed a first tranche of "securities lending operations ... as part of the measures to support the liquidity of banks operating in Italy."
Rising oil revenues have been a windfall for Libya, which recently withdrew all its assets from Swiss banks in retaliation for the arrest of a son of Libyan leader Moamer Kadhafi.
Libyan Prime Minister Baghdadi Mahmoudi said recently that his country should "benefit from the collapse of the world market."
Libya's presence elsewhere in the Italian economy includes a two percent stake in auto giant Fiat and more than seven percent in Turin's Juventus football club.
After years of negotiations, Italy and Libya in late August signed an agreement to normalise relations under which Italy is to give Libya 5.0 billion dollars over the next 25 years as compensation for Italian colonial rule.
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