ROME (Reuters) - Italy's interbank deposit protection fund (FITD) is ready to inject between 220-370 million euros in Banca Carige <CRGI.MI>, to support the bank's capital, an Italian paper reported on Sunday.
FITD, which operates under the Bank of Italy's supervision, has a mandate to safeguard bank deposits under 100,000 euros in the event of a bank failure.
Last week sources said that Italy's top five banks are considering granting FITD a 2.7 billion euro ($3 bln) credit line to boost confidence in the country's financial system.
The 220-370 million euros would be used to underwrite a subordinate bond for Carige, daily Corriere della Sera reported.
The investment would be carried out by the so-called Voluntary Scheme of the FITD - to which banks contribute on a voluntary basis to avoid breaching EU state aid rules - and a green light is expected on Monday, the report added.
Carige is also due to approve its third quarter results on the same day.
A spokesperson for Carige declined to comment on the report. The FTID was not immediately reachable for comment.
Although Economy Minister Giovanni Tria has said the Genoa-based lender is not failing nor likely to fail, Carige was categorised as "fragile" in the latest European Central Bank test of lenders, according to a recent report by daily Il Sole 24 Ore.
Speculation over the health of Italian banks has resurfaced in recent months as contested deficit spending plans by the populist ruling coalition has sent bond yields higher.
The European Central Bank (ECB) has given Carige until the end of the year to close a capital shortfall, or start seeking a merger with a stronger peer.
(Reporting by Giulia Segreti; Additional reporting by Valentina Za in MILAN; Editing by Toby Chopra)