Monte Paschi seeks to press ahead with January capital hike - sources
By Stefano Bernabei and Silvia Aloisi
ROME/MILAN (Reuters) - Italian lender Monte dei Paschi di Siena is set to approve a capital increase of up to 3 billion euros (2.5 billion pounds) on Tuesday, and aims to launch the rights issue as early as January, four sources close to the matter said.
In a statement on Monday, the Tuscan lender said a board meeting had been called to discuss "capital operations", without giving more details.
One of the sources said the board would formally approve the capital increase, part of a restructuring plan demanded by the European Commission to give its approval to a 4.1 billion euro state bailout the lender received this year.
The sources said the cash call was likely to be raised to 3 billion euros from the 2.5 billion euros initially planned. That would be about 500 million euros more than the bank's current market value.
The board will also call an extraordinary shareholder meeting, where backing is needed for the rights issue to go ahead, one of the sources said, adding the meeting will probably be set for December 27.
"The advisers see January as the most favourable window (to launch the cash call)," the source said.
Monte dei Paschi declined to comment, but the bank's executives have said they want to carry out the share sale as soon as possible, pointing to January as the first window of opportunity.
The bank's shares fell more than 6 percent after news that the board meeting had been called, with traders citing expectations the rights issue will be launched soon.
The success of the capital increase is crucial if the bank, which is set to post its third straight annual loss this year, is to avoid nationalisation.
But the picture for the lender is further complicated by the fact that its top shareholder, a charitable foundation with links to local politicians, is also trying to sell down its stake to pay back 350 million euros of debt.
The foundation has said a January capital increase would be too early, asking for more time to find a buyer for part or all of its 33.5 percent holding.
The foundation still has a big enough holding to block any unwanted move at a shareholder meeting.
At the same time, bankers close to the matter say it should sell quickly because the looming capital increase will put more pressure on the share price, raising the prospect that its entire stake in the lender could be seized by creditor banks.
"The foundation is in a corner as the bank is clearly moving to do things quickly," said a separate source close to the situation.
(Editing by Pravin Char)
