Italy drops higher cap for bank merger incentives from decree - draft

ROME, May 20 (Reuters) - Italy has dropped a mooted measure that lifted the cap on tax incentives for bank mergers from a decree the cabinet is set to approve on Thursday, according to a draft seen by Reuters.

Instead, the decree tweaks the current norm only to give lenders more time for potential deals.

Under the draft, the incentives apply if merger deals are approved by lenders’ boards of directors by the end of this year, while at present shareholder approval was necessary by the Dec. 31 deadline.

The draft document no longer includes norms raising the ceiling on the incentives to 3% of the assets of the smaller bank involved in the merger, leaving in place the current 2% cap. (Reporting by Giuseppe Fonte and Valentina Za, editing by Gavin Jones)