Monte dei Paschi di Siena extends share offer in last-ditch attempt to secure private-sector bailout

Jasper Jolly
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Retail and institutional investors will have a chance to buy more shares from Monte dei Paschi di Siena (Source: Getty)

Struggling Italian lender Banca Monte dei Paschi di Siena (MPS) has until Thursday to secure a last-ditch private-sector bail-out before its end-of-year deadline.

MPS announced the extension of its share offer period until Wednesday for retail investors, and Thursday for institutional investors, after repeatedly failing to find €5bn (around £4.2bn) in funding to help recapitalise the bank.

Retail investors in Italy will be able to purchase 35 per cent of the shares, while the other 65 per cent will be reserved for institutional investors from around the world.

Read more: Monte dei Paschi has formally approved its €5bn rescue package

The shares will be limited to a maximum of €24.90, after the bank closed over the weekend at €20.93 on the Borsa Italiana.

If the bank does not find a private-sector buyer the Italian government may be forced to step in to protect bondholders. EU rules technically forbid bailouts without investors taking a hit, but the Italian government is keen to avoid heavy losses for thousands of retail investors.

MPS had been trying to secure investment from Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA).

However, the QIA reportedly backed out of the deal after the resignation of former Prime Minister Matteo Renzi following his defeat in the Italian constitutional referendum at the start of the month.

Read more: The ECB has rejected Monte dei Pachi's request for more time to raise cash

The existence of the world’s oldest bank has been threatened over the last few months, as it continues to struggle under the burden of a large book of non-performing loans (NPLs) – loans where the debtor has missed a repayment in the last 90 days.

The Italian banking sector as a whole has laboured under the burden of €360bn in NPLs since the Eurozone crisis revealed the extent of European over-indebtedness.

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