Dec. 27 - Italy's Monte dei Paschi has received another setback as its top investor looks set to delay a 3-billion-euro ($4 billion) capital increase the Italian lender needs to reimburse state aid and avert nationalistion. Hayley Platt reports.
It's survived more than five centuries but longevity can't help Italy's oldest bank with its latest setback. Monte dei Paschi's main shareholder - the Monte dei Paschi foundation - is threatening to delay a vital 3-billion-euro capital increase. Shareholder's were due to meet on Friday. But less than 50 percent turned up, forcing the troubled Italian lender to push the vote back to Saturday. The charitable foundation wants to delay the rights issue until mid 2014 so it can sell its stake and repay some debt. But Reuter's Lisa Jucca says Monte Paschi is in a hurry for the money. SOUNDBITE: Lisa Jucca, Reuters Chief Financial Correspondent, Italy, saying (English): "They need to pay back the Italian state they took 4.1 billion euros of state aid. So they want to do it as early as possible. The management has proposed January because they feel it they do it later in the year their will be more banks trying to raise capital so it will be a crowded space and it may be riskier for Monte dei Paschi." The rights issue is part of a package of conditions imposed by the European Commission after the bank received the state bailout earlier this year. It also promised to cut costs by shutting 550 branches and axing 8,000 jobs. But the bank is still considered a risky investment and any delay in getting hold of the cash will cost it dear. SOUNDBITE: Lisa Jucca, Reuters Chief Financial Correspondent, Italy, saying (English): "The management has quantified in about 120 million euros the additional cost in carrying out cash call at a later date. The Foundation wants that to be done in late May or later, however it's the uncertainty that this later date creates for the bank and the risk element that makes it more problematic rather than the cost." Under the agreement with the European Commission, the Tuscan lender must complete the capital increase by the end of next year or it will be forced to hand over the keys to the Italian government.