Financial Services

Ailing lender Monte dei Paschi explores options as €2.5bn cash call falters

Arranger banks wary of mopping up shares in event investors shun them

Luigi Lovaglio, chief executive officer of Banca Monte dei Paschi di Siena. Photograph: Alessia Pierdomenico/Bloomberg

Silvia Sciorilli Borrelli
Mon Oct 10 2022 - 15:34

Monte dei Paschi di Siena’s (MPS) management could begin to explore alternative options to a €2.5 billion capital increase planned this month after some arranger banks signalled their unwillingness to mop up shares in the ailing Italian lender should investors shun the sale.

Chief executive Luigi Lovaglio, a turnaround specialist appointed this year by Mario Draghi’s government to revamp and privatise MPS, said in the summer that the Tuscan lender would launch a cash call partially backed by the Italian treasury to restore capital buffers. However, over the past two months both domestic and international investors signalled they would steer clear of the share issue. Two bankers in Milan said on Sunday that following a last-minute turn of events they still believed the capital raise was likely to succeed.

The treasury, which has owned a controlling stake in MPS since a 2017 bailout, can only underwrite an amount, up to €1.6 billion, that is proportional to the private investors’ uptake.

In order to meet the deadlines to launch the share issue, details of it must be presented to domestic regulator Consob by Wednesday.

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According to three people close to the talks, advisers are suggesting that MPS look at alternative routes to raising funds such as a debt-to-equity swap and the potential sale of business units. – Copyright The Financial Times Limited 2022

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