Struggling Italian bank Monte dei Paschi has been holding out for a hero, and investors are rejoicing as it revealed last night that it may have just found one.
Long after the European markets had gone to sleep last night, the bank revealed it had received two letters – one from businessman Corrado Passera and another from Swiss banking giant UBS – containing "proposals concerning the bank".
Although Monte dei Paschi didn't reveal much else about what the letters contained, it added it was analysing the content and had already gone back to request more information. Many have speculated, however, the letters were proposing a rescue plan.
Even though the company stayed reasonably tight lipped over their feelings about the letters, investors were definitely pleased to hear the news. Shares are currently trading up seven per cent at €0.31. The price also peaked earlier today at €0.32, the highest its been so far this week.
Shares in Monte dei Paschi have been on a painful decline for some time now, as the price has declined more than 80 per cent across the course of a year. The Brexit vote last month also did the bank few favours, as the surprise result sent share prices in the industry plummeting across the globe.
Italian banks have been faring particularly badly as of late, thanks to the high levels of soured loans – approximately €360bn (£301.3bn) worth – they carry on their books.
It has also been speculated that Italian Prime Minister Matteo Renzi has recently locked horns with the European Commission to try and arrange a capital injection for the banking sector, even through it would involve circumventing EU rules.
UBS declined to comment on the letter received by Monte dei Paschi.
The news of the letter came not only on the eve of Monte dei Paschi's results, but also of the European banking stress test results.
A note issued by Goldman Sachs last week indicated that, had the stress test criteria echoed that of 2014, Monte dei Paschi would more likely than not meet the capital criteria.