MILAN, Feb 14 (Reuters) - * Italian banks Banca Popolare di Vicenza and Veneto Banca have submitted a draft merger plan to the European Central Bank that includes a new capital injection of between 4 billion and 5 billion euros ($4.3-5.3 billion), Il Messaggero reported without citing sources.
* The paper said the draft plan had been submitted also to European Union’s competition authorities to clear the way for a an expected investment by the Italian state in the two ailing regional banks.
* The plan prepared by Popolare di Vicenza CEO Fabrizio Viola also envisages the creation of a bad bank where the two bank’s 9 billion euros of bad loans would be transferred, the paper said.
* Popolare di Vicenza and Veneto Banca did not immediately reply to a request for comment.
* Italy could tap the 20 billion euro bank aid fund it introduced in December which it used to bail out Monte dei Paschi di Siena.
$1 = 0.9416 euros Reporting by Valentina Za. Editing by Jane Merriman