Monte Paschi poised for showdown with top investor over cash call delay
Italian bank Monte dei Paschi di Siena's board said it disagreed a request by its top investor to delay a €3 billion ($4 billion) capital increase. This has reportedly set the scene for a showdown at a shareholder meeting scheduled this month.
According to Reuters, Monte Paschi chairman Alessandro Profumo and chief executive Fabrizio Viola wanted to launch the rights issue in January. The two executives have also secured a pool of banks to guarantee it. But Fondazione Monte dei Paschi di Siena, the bank's largest shareholder, has threatened to vote against the cash call unless it is pushed back until after May 12, the report said.
Reuters, citing a statement made by Monte Paschi on Thursday, said that delaying the cash call would cost the Italian lender at least €120 million in interest payments. Launching the rights issue immediately would bring benefits worth €800 million annually.
Monte Paschi intends to use the money from the capital increase to pay back the bulk of a €4.1 billion state bailout, the report said. Unless the two sides find an agreement, things will come to a head at a shareholder meeting on December 27, Reuters added in its report.