Monte dei Paschi auditors flag ‘significant uncertainty’ on bank's prospects

MILAN: Auditors reviewing Monte dei Paschi's 2020 financial statements have flagged "significant uncertainty" regarding the Italian lender's prospects, documents on the bank's website showed.

PwC auditors signed off on the accounts only after lengthy discussions, several sources with knowledge of the matter had previously told Reuters. PwC declined to comment.

Monte dei Paschi published documents on its website late on Tuesday ahead of its annual meeting on April 6.

The Tuscan bank posted a 1.69 billion euro ($2 billion) loss last year.

Italy rescued Monte dei Paschi in 2017, spending 5.4 billion euros on a majority stake currently equal to 64%.

The bank has said it expects to breach regulatory capital thresholds by 300 million euros at the end of March, a shortfall which it sees rising to up to 1.5 billion euros by Jan. 1, 2022.

Italy has sought in vain to seal a merger to address Monte dei Paschi's woes. The bank has plans to raise 2.5 billion euros in a cash call if the Treasury fails to find a buyer for it.

However, the capital raising and a further cash injection by the Treasury need to be cleared by the European Commission and discussions with Brussels are ongoing, casting doubts on recapitalisation plans, Monte dei Paschi has said.

But the bank's board is confident it will be able to plug the shortfall, the documents showed.

"Directors, having taken into account steps taken so far and evaluated the significant uncertainty over the bank's capital strengthening, believe the group has a reasonable expectation to continue to operate as a going concern in the foreseeable future," PwC said in a report included in the AGM documents.