UPDATE 2-Fiat in talks on possible capital increase - source
* Possible capital increase 1-2 bln euros - paper
* Fiat declines to comment
* Talks at informal stage - source
By Jennifer Clark and Sophie Sassard
MILAN/LONDON, Dec 14 (Reuters) - Italian carmaker Fiat is in talks with banks about a capital increase to buy out the remaining 41.5 percent of Chrysler, a person familiar with the plan said.
"Nothing has been decided yet, but it could come very soon," said the person, adding that no mandate had been given so far.
An unsourced report in Il Messaggero on Friday said Fiat was sounding out UniCredit, Morgan Stanley, Bank of America and Goldman Sachs about the possibility of raising between 1 and 2 billion euros ($1.3-$2.6 billion).
Fiat declined to comment.
Chrysler is worth between $9 billion and $13.4 billion, UBS estimated in November, meaning the 41.5 percent stake would be worth between $4.1 billion and $5.5 billion. Continued...