MILAN-- Banca Monte dei Paschi di Siena SpA warned Friday it
could need to find additional capital on top of the EUR5 billion it
will start raising next week, if the asset quality review the
European Central Bank is carrying out on the euro-zone largest
lenders requires it to set aside additional provisions for bad
loans.
The cautionary message was contained in the prospectus for the
EUR5 billion shares sale the bank will launch Monday at a steep
discount of 35.5% on the theoretical ex-rights price, or Terp,
calculated on Thursday's closing market price. Such a discount is
the highest seen this year in a number of cash calls Italian
lenders planned to raise a combined EUR11 billion.
The fresh funds are meant to enable the bank to start paying
back the EUR4.1 billion loan it got from the Italian government
last year to plug a capital shortfall identified by the European
Banking Authority toward the end of 2011.
The bank had already increased several times the planned amount
of the cash call from an initial EUR1 billion originally announced
in June 2012 to EUR5 billion.
In April, when Monte dei Paschi decided to raise it from EUR3
billion to EUR5 billion, it said the larger cash call would have
enabled it to be better prepared to face potential requests by the
European Central Bank to set aside more money to cover for losses
on deteriorating loans.
With the proceeds of the share sale it plans to pay EUR3 billion
back to the government as soon as it gets the cash from
investors.
The capital increase, which amounts to almost double the current
market value of the bank, will be guaranteed by more than 20 banks
led by UBS AG.
Write to Giovanni Legorano at giovanni.legorano@wsj.com