Monte Paschi set to press ahead with capital increase

City A.M. Reporter
ITALIAN lender Monte dei Paschi di Siena has called a board meeting for this morning to discuss its capital, indicating it wants to press ahead with a €2.5bn (£2.1bn) rights issue it must carry out by the end of 2014.

In a statement yesterday, the Tuscan bank did not give more details.

The bank’s board needs to formally approve the cash call and win the support of shareholders for the capital increase to go ahead. If the rights issue, which is roughly equal to the bank’s market value, fails, the lender faces the prospect of nationalisation.

The capital increase is one of the conditions set by the European Commission to give its green light to a €4.1bn bailout the bank received this year. That green light is expected by the end of this week. Monte dei Paschi’s executives have said they want to carry out the share sale as soon as possible and pointed to January as the first window of opportunity.

Shares in the bank slumped by almost seven per cent during trading yesterday, with traders citing expectations the cash call could be launched as early as January.