Monte Paschi needs cash call to stay in Siena, top execs say
MILAN (Reuters) - Monte dei Paschi di Siena would be nationalised without a capital injection and disappear from its base in Siena, senior bank executives were quoted saying in an attempt to overcome local opposition to its planned rights issue.
The board of the bailed-out Tuscan bank on Tuesday approved a cash call of up to 3 billion euros ($4 billion), more than its market value, to avoid nationalisation. It hopes to complete the share sale in the first quarter of 2014.
The capital increase is required as part of a restructuring demanded by the European Commission for approving the 4.1 billion euros in state aid the lender received this year.
"It should be very clear to Siena that any nationalisation would mean the disappearance of the bank from the city," MPS Chairman Alessandro Profumo told la Repubblica daily.
The bank has been at loggerheads with its top shareholder, a charitable foundation with strong local ties, which is also trying to sell down its stake to pay back 350 million euros of debt and was hoping to delay the cash call.
The Fondazione Monte dei Paschi di Siena has said a January capital increase would be too early, asking for more time to find a buyer for all or part of its 33.5 percent holding.
Siena Mayor Bruno Valentini was quoted as saying on Wednesday he fully backed the foundation's request of a delay.
COUP D'ETAT
"Siena can't witness without reacting this sort of internal coup d'etat, with the bank getting rid of its owner," Valentini was quoted in financial daily Il Sole 24 Ore.
But Profumo said that without a recapitalisation needed to pay back state aid, "nationalisation would be a certainty" and the Treasury would then re-sell the bank within five years.
"It would be impossible to put back on the market 100 percent of Monte di Paschi," Profumo said. "It could be incorporated (into another bank) or torn into pieces."
Chief Executive Fabrizio Viola was quoted saying in Corriere della Sera the cash call should ensure the bank remains independent and based in Siena.
Viola said the rights issue would fall apart if the foundation shareholder voted against it at a meeting called to approve the operation at the end of December.
"There would be several consequences. Let's hope we don't have to deal with that," Viola said.
Profumo said a cash call in January as opposed to June would enable the bank to save on interest costs, and with other banks planning capital increases in 2014, a later date would complicate matters.
"There is extremely high volatility on the market," he said. "We also need to factor in the risk of a deterioration of the political situation in Italy and its repercussion on the (Italian) BTP (bond) spreads."
Shares in Monte dei Paschi were down 2 percent by 0811 GMT, adding to a 13.4 percent fall over the past two days.
(Reporting by Agnieszka Flak and Valentina Za; Editing by David Holmes)
