Monte dei Paschi in last-ditch effort to lure retail investors

Italy’s third-biggest bank has to the end of this month to raise €5bn or face winding down

The failure of the bank could trigger a wider banking and political crisis in Italy. Photograph: Dan Kitwood/Getty Images

The failure of the bank could trigger a wider banking and political crisis in Italy. Photograph: Dan Kitwood/Getty Images

 

Troubled Italian bank Monte dei Paschi di Siena sought on Friday to convince 40,000 retail investors to take part in its last-ditch rescue plan, warning them they could face bigger losses if they did not convert their bonds into shares.

Italy’s third-biggest bank has until the end of this month to raise €5 billion in equity or face the risk of being wound down, potentially triggering a wider banking and political crisis in Italy.

Should the privately-funded plan fail, the government is ready to step in with state money to keep the Siena-based bank in business, though such a move would require both retail and institutional investors to share in losses.

Monte dei Paschi said on Friday market watchdog Consob had given the go-ahead to the extension of a voluntary debt-to-equity offer to retail investors owning €2.1 billion of its junior debt.

The offer runs from December 16th to 21st.

The bank, noting there could be no certainty Rome would pump in public money, warned that any state aid could force bondholders to convert their securities on worse conditions than those of the lender’s voluntary debt swap offer.

Underscoring its vulnerability, the bank said on Friday deposits had fallen by €6 billion between September 30th and December 13th.

– (Reuters)