Monte dei Paschi fails to attract anchor investors to its share offer

Courtney Goldsmith
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The Italian government will likely bail out Monte dei Paschi (Source: Getty)

The world's oldest surviving bank, Monte Dei Paschi di Siena, looks set for a multi-billion-euro government bailout after admitting late last night that an eleventh-hour private rescue plan was unlikely to succeed.

Earlier in the day Italy’s parliament agreed a new €20bn (£16.8bn) bailout package for the country’s struggling lenders, with Monte dei Paschi expected to be first in the queue.

Shares in Monte dei Paschi were suspended during trading after investors reacted to warnings the bank could quickly burn through its cash on hand.

And last night the bank, founded in 1472, published a statement admitting that it had not found an anchor investor for its €5bn recapitalisation plan.

Read more: Montei dei Paschi to cut 2,600 jobs

Sources told Reuters the failure to secure an anchor investor had dissuaded other private sector institutions from supporting the plan.

“The idea that Qatar could be an anchor investor has vanished and without an anchor investor there is no demand from anyone else,” one source said.

Qatar’s sovereign wealth fund had been considering a €1bn investment as part of a rescue package. Earlier this week, the bank announced it was extending its share offer in a last ditch

attempt to fund a private-sector bailout, with the deadline for retail investors being set for yesterday and for institutional investors at 1pm GMT today.

Now, however, the bank seems all-but-certain to tap the Italian government’s new bailout fund instead.

Under EU bailout rules, investors must bear some of the losses before taxpayer money can be used to save a bank.

Prime Minister Paolo Gentiloni’s new government is expected to meet this week to issue an emergency decree to bail out Italy’s third-largest bank. This would open up Monte dei Paschi’s 40,000 retail bondholders to losses.

Shares in the bank plummeted more than 17 per cent yesterday, eventually closing down 12.1 per cent at €16.30.

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