Monte Paschi freezes coupon payments on hybrid debt
Bank wants to meet European conditions for approving a €4.1bn state bailout
The Monte dei Paschi bank headquarters in Siena. New plan is already known to include a €2.5 billion share sale imposed by Brussels. Photograph: Reuters/Stefano Rellandini
Monte dei Paschi di Siena (MPS) has cancelled coupon payments on three hybrid loans coming due at the end of the month to meet European conditions for approving a €4.1 billion state bailout.
Italy’s third-biggest bank, brought close to collapse by the euro zone debt crisis, is set to unveil a turnaround plan this week after the EU told it to toughen up a previous set of restructuring measures.
The new plan is already known to include a €2.5 billion share sale imposed by Brussels, more than twice the €1 billion cash call originally pencilled in by the bank.
If the lender, which is also being investigated for its costly purchase of a rival in 2007 and for loss-making derivative trades, cannot raise the funds on the market, the threat of nationalisation looms. – (Reuters)