July 6, 2017 / 6:11 AM / in 16 days

Italian banking fund sees return rate of 8-12 percent from Monte dei Paschi: report

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The entrance of Monte dei Paschi bank headquarters is pictured in downtown Siena, Italy June 30, 2017.Stefano Rellandini

MILAN (Reuters) - Italian bank rescue fund Atlante expects a return rate of 8 to 12 percent from the bad loan portfolio of lender Monte dei Paschi di Siena, an Italian newspaper said on Thursday.

EU state aid regulators approved on Tuesday Monte dei Paschi di Siena's a 5.4 billion-euro ($6.1 billion) state bailout of Italy's fourth-largest lender after the troubled Italian bank agreed to a radical overhaul.

As part of the revamp Monte Paschi will transfer 26.1 billion euros ($29.60 billion) in bad loans to a privately funded special vehicle on market terms, with the operation partially funded by the Atlante II fund.

"We expect a return rate of between 8 and 12 ... a significant rate although there is a high risk of execution," Paolo Petrignani, the chief executive of Quaestio, the fund which manages Atlante, told financial daily Il Sole 24 Ore in an interview.

Petrignani added that Quaestio was in talks with "several parties and there is interest" for the securitisation of the bad loan portfolio.

He said that if the fund could make 200 million to 300 million euros from the investment in Monte dei Paschi, getting other funds involved, Quaestio could consider other operations, without giving further details.

Reporting by Giulia Segreti and Gianluca Semeraro; Editing by Greg Mahlich

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