Banks work on UniCredit capital hike: Source

MILAN: Merrill Lynch and Italy's Mediobanca and are working on a 2.0-2.5 billion euro capital increase for UniCredit Italy's second-biggest bank by market value, a financial source said on Sunday.

The capital increase will be guaranteed by a convertible bond, the source said. UniCredit's board is meeting on Sunday to decide on extraordinary measures to boost the bank's capital. The package, including a new share issue to hand out as dividend and a convertible bond, may total 5-6 billion euros, Italian newspapers said on Sunday.