Monte Paschi aims to raise €5bn capital

BANCA Monte dei Paschi di Siena may need to raise up to €5bn (£4.13bn) through an upcoming capital hike, rather than the €3bn originally planned, Italian news agency ANSA reported yesterday.

The world’s oldest bank is due to launch a rights issue at the end of May to help pay back a €4.1bn state bailout received after it was hit hard by the Eurozone debt crisis and a scandal over loss-making derivatives deals.

An increase in the amount to be raised would need approval first from Monte Paschi’s consortium of underwriting banks, then the board of directors and finally an extraordinary meeting of shareholders, which would probably mean the transaction would be pushed forward, perhaps to June, ANSA said.

The capital increase was part of a restructuring demanded by European Union regulators in order to approve the state aid.

The decision follows a major restructuring for the historic bank, which last year voted through a plan to cut 8,000 staff and raise capital. The 540-year-old banks said it aimed to repay its debts by 2017.

Last month the bank’s biggest shareholder, the Monte dei Paschi foundation, halved their controlling stake in the bank, turning it into a takeover target.

Analysts at Italian broker Equita SIM wrote in a note: “This increases the speculative appeal of Banca Monte dei Paschi which, after the capital increase, will become the easiest takeover target (among Italian banks).”

Monte dei Paschi and UBS, the leading bank on the consortium guaranteeing the capital increase, could not be reached for comment last night.