Monte Paschi freezes coupon payments on hybrid debt

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)