MILAN - The board of Italian bank Unicredito has decided not to convert into shares next week its part of a loan to industrial group Fiat, a source familiar with the issue said on Thursday.
Eight banks, led by Capitalia, Banca Intesa, Sanpaolo IMI and Unicredito loaned Fiat 3 billion euros in 2002 to help it stay afloat during its worst-ever crisis.
Converting the loan would cost the banks hundreds of millions of euros and could leave them owning the automaker.
At the end of July, the banks have the option of converting two-thirds of the loan at a price between 14.44 euros and the average of Fiat's stock price over the past three months.
Financial sources told Reuters earlier this month that Fiat's creditor banks had decided not to convert the loan.
Under the terms of the deal, the banks could convert the loan into equity from July 2004 to September 2005 if Fiat missed key debt-cutting targets, or could not pay the money back.