Upcoming Monte Paschi meeting spurs tension on cash call

By Rizza Sta. Ana

Dec 27, 2013 10:42 AM EST

The days before troubled Monte dei Paschi di Siena's upcoming cash call meeting, tensions had risen with sources saying that Chairman Alessandro Profumo has threaten to quit should the top investor of the Italian bank delays the all-important €3 billion or $4.11 billion capital hike.

The oldest bank in the world had been forced to accept from the Italian state €4.1 billion worth of aid early this after the bank was affected by the debt crisis in the Euro Zone and the derivatuves trades that incurred losses.

According to a Reuters report, the cash call is the Tuscan bank's solution to avoid nationalization and repay the state aid. It was said that Profumo and chief executive officer Fabrizio Viola wanted to conduct a cash call in January and had already asked shareholders this week to approve the framework. Moreover, they have secured a pool of banks who were ready to act as guarantors of the rights issue and will most likely carry it out quickly to remove doubts and avoid a series of cash calls by other lenders in Europe that would make the fundraising a bit harder.

Monte Paschi's biggest shareholder on the other hand, was keen to push the cash call back sometime the middle of next year in order to have time to auction off its 33.5% stake and repay its debts/ Reuters said in its report that Monet Paschi's biggest shareholder is a not-for-profit foundation who is cash-strapped and has political ties in Siena.

A shareholder meeting supposedly held on Friday was moved to Saturday as only 49.3% of shareholders had shown up, which was below the required 50% of shareholders plus one legal threshold. The report said that the lack of investors in the meeting was due to the holiday break.

The quorum on Saturday will only require one-third of the shareholders for the foundation to postpone the cash call, the report added.

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