ROME: The Italian treasury's stake in Monte dei Paschi di Siena could rise to around 7 percent because of an outstanding debt, which would make the state the troubled Italian bank's biggest shareholder, two sources close to the matter told Reuters on Tuesday.
The bank's share price lurched down after the Reuters report, with one trader saying an increase in the government's stake was "not a good sign". One analyst also said it could further complicate Monte dei Paschi's so far fruitless search for a merger partner.
The treasury currently owns around 4 percent of the Tuscan bank because it received that stake as payment of interest on 4.1 billion euros ($4.55 billion) of state loans the lender was granted at the height of the euro zone crisis.
The bank paid off the last tranche of those loans in June 2015 but still has to pay the interest owed for the first six months of last year.
According to one of the sources, the coupon will be paid by issuing new shares to the treasury, which as a result will see its stake increase to around 7 percent.
A second source said it was not yet clear whether the bank would pay the coupon in shares or in cash.
The payment falls due in July. The treasury was not immediately available for comment. Monte dei Paschi declined to comment.
Monte dei Paschi, the worst performer in a Europe-wide check on the financial health of banks in 2014, has been told by the European Central Bank to find a buyer.
But no suitor has emerged so far, with bankers saying concerns about the lender's huge pile of bad loans - it has the biggest proportion of soured debts among Italian banks - is keeping potential bidders at arm's length.
The bank's shares rose more than 10 percent on Monday after a newspaper report said Prime Minister Matteo Renzi had sounded out state holding company Cassa Depositi e Prestiti (CDP) and Italy's strongest bank, Intesa Sanpaolo, for a possible rescue.
The stock was down 6 percent at 0.5970 euros by 1623 GMT. "The payment of the coupon in shares would signal that the bank is still not solid enough to pay in cash," said Vincenzo Longo, an analyst at IG.
"And the increased presence of the treasury could make the search for a partner harder. Whenever politics get in the way, things tend to move slowly."
Intesa has repeatedly said it is not interested, and sources close to the matter say the CDP does not have enough readily available funds to intervene and could violate European state aid rules if it did. UniCredit, Italy's biggest bank by assets, has also said it does not want to get involved.
"No one's buying Monte dei Paschi because no one knows how much extra capital the bank may need," said a senior banker.
Comments
Comments are closed for this article.