Monte Paschi's cash call to be delayed until May 2014 - shareholders

December 28
11:50 AM 2013

A Bloomberg report said bailed-out Italian bank Banca Monte dei Paschi di Siena SpA will be delaying a critical 3 billion-euro ($4.1 billion) stock sale until May next year after its top investor sought for a postponement.

The shareholders of the bank had supported the delayed rights offer at an extraordinary shareholder meeting held in Siena today, said Monte Paschi Chairman Alessandro Profumo. The report said the decision of the Italian lender's shareholders ended the clash between the main shareholder and the bank regarding the schedule of the share offering.

The cash call Monte Paschi's management intended to conduct was to raise the funds to repay aid it received from the state and in order to avoid nationalization. The lender's management was pushing for a cash call to be conducted in January in order to be the first among domestic banks for the year to raise capital. Fondazione Monte dei Paschi di Siena, the top shareholder of the Italian lender, vowed to oppose the share sale unless it will be delayed until after the first three months of next year in order to provide the foundation more time to recuperate and fix its own financial standing.

About €340 million in loans are due to be reimbursed by Fondazione Monte Paschi by year 2017, and had already put its 33.5% equity stake in the Italian lender as a collateral. According to a source who has knowledge of the transaction and refused to be identified as the information was private knowledge, said the shares of Monte Paschi will be seized from the bank's foundation by a dozen of its creditor banks should trading price falls under 12.8 cents per share. Chairman Antonella Mansi has said delaying the rights offer will allow the foundation to have more time to find potential buyers of its shares and eventually repay debt.

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