Banca Monte dei Paschi di Siena has opened a debt to equity conversion, a major part of a private rescue plan, to retail investors. But as Kate King reports, sources say the Italian government is standing by with a 15 billion euros emergency fund for Monte and other ailing banks, just in case.
Christmas is coming and so is D day for the world's oldest bank. Monte dei Paschi has until December 31 to raise 5 billion euros in equity... or face closure by the ECB, possibly triggering a wider crisis for Italy's banking industry. Still it's not giving up without a fight. Paschi has reopened its debt-for-equity conversion as part if its private rescue plan, extending it to retail investors. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "As long as it's converted at a similar rate, then given that the share price of these banks at the moment there is potential significant upside for investors but of course it does also bring significant additional risk." The lender has set a price range of one to 24.9 euros per share for the new equity. But even at one euro a share, it would be a far higher valuation than nearly all its domestic rivals. There is another possible option from Italy's government. It's reportedly offering to pump 15 billion euros into Monte dei Paschi and the country's other ailing banks. Analysts aren't convinced it's the best way forward. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "Maybe consolidation of some kind would be the best thing to look at first rather than just helping these struggling banks to continue to live on." Rome will be hoping for a positive outcome to soothe concerns over Italy's banks. Private investors may not be too keen. EU rules would require them to share in losses if Rome were to go ahead with a bailout.