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Monte Paschi's Profumo to mull over a January resignation

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December 28
11:33 AM 2013

Monte dei Paschi di Siena's chairman Alessandro Profumo stated on Saturday that he might consider whether he will be resigning in January next year.

He told shareholders in a meeting, "These are decisions one takes in cold blood and in the right place, I have nothing to say. What I have on my mind is a 3 billion euro cash call because we need to pay back 4 billion euros to taxpayers. Today this is uncertain and at risk."

Profumo added that he will reveal his decision in January in a board meeting. A Reuters report said Profumo could quit his post at the troubled Italian lender due to a clash with the bank's top investor. The clash was reportedly about the timetable of a critical cash call intended to keep the bank afloat.

An extraordinary meeting was held on Saturday, wherein Profumo revealed his intentions to resign, to decide whether the bank should proceed with its $4.1 billion share sale in order to increase its capital until the middle of 2014. The oldest bank in the world wanted to increase its capital to avoid having the bank nationalized. Monte Paschi had been affected greatly by the debt crisis in the Euro Zone and the loss-generating derivatives trades.

Monte Paschi's top shareholder - a charitable banking foundation who has strong connections with politicians in Siena, created a friction with the management over when the cash call should be conducted.

Should Profumo resign, Italian newspapers had said that possible replacements would be chairman Carlo Salvatori of the Italian unit of German insurer Allianz and former European Central Bank policymaker Lorenzo Bini Smaghi.

The head of the Monte dei Paschi foundation, Antonella Mansi, said the foundation's insistence to delay the cash call did not mean that the entity has no confidence with the lender's current management. However, she said that should the cash call proceed in January, it could greatly affect the value of the foundation's holding.

"We have a precise duty to ensure (the foundation's) survival. You can't ask us to let it collapse," Mansi added.

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