Exclusive: Italy treasury considers hiking Monte Paschi stake via debt swap - sources
Reuters
Published Dec 06, 2016 12:43PM ET
Exclusive: Italy treasury considers hiking Monte Paschi stake via debt swap - sources
ROME (Reuters) - The Italian treasury is considering raising its stake in Monte dei Paschi di Siena (MI:BMPS) to help the ailing lender remain in business by buying subordinated debt held by retail investors and converting it into equity, two sources with knowledge of the matter said.
The bank must raise 5 billion euros by the end of the month to avert being wound down but a private-sector recapitalization plan has been thrown into doubt by Prime Minister Matteo Renzi's defeat in a referendum on constitutional reform on Sunday.
The bank is set to raise just over 1 billion euros through the conversion into shares of its subordinated debt tendered by institutional investors.
On top of that the treasury would buy junior debt held by retail investors to ensure they do not suffer any losses, one of the sources said.
A second source within Italy's government confirmed the plan. Some 40,000 retail investors hold around 2 billion euros of the Tuscan bank's junior bonds.
"The government is ready and will implement the plan if needed," this source said.
The Treasury is currently Monte dei Paschi's top shareholder with a 4 percent stake.
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Written By: Reuters
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