VIENNA: Italian lender Monte dei Paschi di Siena expects to complete its planned capital increase by July and can use divestments to help plug a hole in its balance sheet, Chairman Alessandro Profumo told an Austrian newspaper. Monte Paschi needs to shore up its capital base following this year's euro zone health check of European banks.
It plans a cash call of up to 2.5 billion euros ($3.06 billion) next year.
Asked by Der Standard in an interview in its weekend edition what the plan was to fill the gap, he said this had not been officially announced but added: "It consists of the capital increase but also the sale of assets."
A consortium comprised of UBS, Citibank, Mediobanca, Goldman Sachs and other foreign institutions is getting the standard 3 percent fee for handling the capital increase, he said, adding it "should be completed by July 2015 at the latest". Profumo said the bank was not seeking to extend to 2017 the repayment of the last 1 billion euros of state aid it has yet to pay back. He said this would happen after the capital increase.
Asked about talk a Chinese investor was ready to buy into Monte dei Paschi, he said: "If there is something to report, we will do that. We are not currently conducting any negotiations." He said bad loans would weigh on the bank again next year.
"The volume of non-performing loans is still quite high, the provisions for these as well.
Since we are the bank of small and mid-sized companies in Italy, which are suffering most from the crisis, non-performing loans will hit us also in 2015," he said.
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