Monte Paschi unions say EU pushing for merger

November 6
10:37 PM 2014

Labor unions at Italy's Monte dei Paschi di Siena (BMPS.MI) on Thursday urged the Italian government to resist what they said was pressure from the European Union for the bank to merge with another group.

Italy's third largest bank, the world's oldest, has just approved plans to raise up 2.5 billion euros (3.10 billion US dollar) to fill a capital gap of 2.1 billion that was revealed last month in a Europe-wide health check of banks.

The fundraising is viewed as a step towards a possible sale of Monte dei Paschi, which has already carried out three capital increases since 2008, including one in June for 5 billion euros. The bank's market value has fallen sharply since the capital shortfall was made public and is currently just over 3 billion euros.

The bank's unions, which met CEO Fabrizio Viola on Thursday to discuss the capital-boosting plan, said the bank did not need a tie-up which could put jobs at risk. They also said the government should stand up to the European Union on the issue.

"The EU is pushing for a merger which has nothing to do with the capital increase or the results of the European tests," said Antonio Damiani of the left-wing Fisac CGIL union.

"It's a sort of moral suasion (by the EU) to go down a road which is not helpful for the bank ... The government should deal with this."

The unions later released a joint statement echoing Damiani's comments.

Chairman Alessandro Profumo told Reuters last week a merger with another player was an option. A senior Bank of Italy official, Fabio Panetta, said on Oct. 26 that the central bank would welcome any solution, including a merger, that made Monte dei Paschi stronger.

"We are not aware and have not been approached on this," a European Commission source told Reuters when asked whether it was pushing the bank towards a merger with another bank. "We did not approach this issue either in talks with the bank," the source said.

Monte dei Paschi had to submit a restructuring plan to the Commission to win approval for a 4.1-billion euro state bailout it received last year. It will now have to update that plan with measures to fill the capital shortfall once they are approved by the European Central Bank. The shortfall has to be filled within nine months.

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