Italy's largest retail bank Intesa Sanpaolo is mulling a capital increase of around five billion euros ($7.06 billion).

Intesa Sanpaolo's management and supervisory boards are meeting on Tuesday to decide on the capital hike, a financial source said. A second banking source said the figure of 5bn euros was "realistic".

In a statement on Friday, Intesa Sanpaolo said it would give details on a possible capital hike only after its management board meeting on Tuesday.

Italian business daily Il Sole 24 Ore said Intesa Sanpaolo could offer shares at a 25-30 per cent discount price from its stock's theoretical ex rights price.

With a core Tier 1 ratio of 7.9pc at the end of 2010, Italy's No 2 bank by market capitalisation behind UniCredit is not in immediate need of a capital injection.

But it may need to boost its financial position should regulators slap more stringent requirements on banks deemed to be systemically important.