MILAN-- Banca Monte dei Paschi di Siena SpA shares fell sharply
Tuesday after The Wall Street Journal reported that the troubled
Italian lender may attempt to raise more than initially planned
from a coming share sale.
Its shares were down by around 8% midmorning.
People familiar with the matter said Monday that the bank's
management was considering raising up to EUR5 billion ($6.9
billion) instead of EUR3 billion as previously planned. A spokesman
for the bank declined to comment on Monday.
In a statement published Tuesday the bank said it was assessing
how much capital it needed to pay back a state loan this year,
after the European Central Bank published the criteria it will
follow in the health check it is carrying out on the euro zone's
largest lenders.
The bank also said it held talks with the national regulator on
the matter.
The Tuscan bank, which is often referred as the world's oldest,
badly needs fresh funds to pay back a government loan of EUR4.1
billion it took last year to plug a capital shortfall.
If doesn't carry out a share sale this year, the loan will be
nationalized.
One of the people familiar with the matter said that if Monte
dei Paschi raises EUR5 billion it will still use only EUR3 billion
to pay back part of the government loan and will then wait until
the end of the continuing ECB review in October before deciding
whether to pay back the rest of the loan this year.
One person said the bank wanted to take advantage of currently
favorable market conditions and that its Italian peers are likely
to build up better capital buffers, either through share sales or
asset sales.
Half of the 15 banks under the ECB's asset quality review are
planning capital increases totaling at least EUR8 billion.
On the other hand, UniCredit SpA, Italy's largest bank by
assets, decided to list its online bank Fineco. It may also sell
its German online lender DAB Bank and its credit collection unit,
together with portfolios of bad loans. It recently decided to write
down the value of its bad loans and past acquisitions by more than
EUR18 billion, resulting in a EUR15 billion fourth-quarter
loss.
Intesa Sanpaolo SpA, Italy's second-largest bank by assets,
posted a EUR5.2 billion net loss after writing down the value of
its bad loans and goodwill by almost EUR9 billion.
Shares in the country's largest banks have grown on average by
30% since the beginning of the year as investors welcomed the
balance sheet cleanups and easing sovereign debt worries. Italian
banks are significant sovereign debtholders.
Earlier in March, when MPS announced its seventh consecutive
quarterly loss, it said it had lined up a number of investment
banks to buy any unsold shares for its EUR3 billion capital
increase.
One person familiar with the matter said those banks would
support a EUR5 billion share sale too.
Monte dei Paschi had signed an initial agreement with the same
pool of banks to guarantee the share sale in January.
However, the bank's shareholders led by the MPS Foundation,
which at the time owned around 30% of the bank's capital, voted
against the share sale in January and forced the bank to postpone
it until after mid-May.
In the meantime the MPS Foundation sold most of its shares to
avoid its stake being diluted by the capital increase.
A bigger capital hike would only delay the transaction by couple
of weeks, which means it won't now happen before the end of
May.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
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