To avoid a state bailout, Italy’s troubled bank Monte deiPaschi di Siena is trying to raise €5bn by the end of the year. The troubled bank will offer new shares for sales between December 19 and 22.
As reported by the Reuters news agency, the European Central Bank told Italy’s third-largest bank to raise capital this year and offload €28bn in bad loans. Finding investors, however, has proved difficult amid political turmoil and this month’s change of government.
Monte deiPaschi said on December 18 its share offer for institutional investors, which accounts for 65% of the total, would run until 1300 GMT on December 22.
The offer aimed at current shareholders and retail investors will end at 1300 GMT on December 21.
Monte deiPaschi said in a document on its website that, if successful, the share issue could raise up to €3.2bn.
The rest of the capital needed would come from a voluntary debt-to-equity conversion offer on the bank’s junior debt which has already raised around €1bn.
In a separate report, The Wall Street Journal noted that the Italian government has been readying a rescue plan, should the bank fail to raise the funds it needs from private investors.
According to people familiar with the matter, it could step in and, among other things, inject capital into Monte deiPaschi, if it became evident that private investors are unwilling to shore up the bank.
According to European rules, losses to shareholders and bondholders will likely be imposed if the Italian government rescues the lender.