MILAN Italy's Monte dei Paschi di Siena (BMPS.MI) has raised around 500 million euros as of Tuesday in a voluntary debt-to-equity offer that is a key part of a last-ditch attempt to raise 5 billion euros ($5.2 billion) and avert state intervention, a source close to the matter said.
The troubled bank, recently judged the weakest of the European Union's major banks, must raise the money by the end of this month as part of a rescue plan that also includes the sale of 28 billion euros in bad loans.
Finding investors has proved difficult amid political turmoil triggered by the resignation of Prime Minister Matteo Renzi following his defeat in a constitutional referendum on Dec. 4, and a state bailout looks likely.
A failure of the world's oldest bank would threaten
the savings of thousands of Italians and could have repercussions on the country's banking sector, saddled with a third of the euro zone's total bad loans.
Italy's third biggest bank reopened the debt swap offer on Friday to include retail investors owning 2.1 billion euros of the bank's junior debt and holders of a hybrid financial instrument known as Fresh 2008.
The new swap offer, which the bank estimates could raise 1.8 billion euros including 1 billion euros already tendered by institutional investors in a first phase, ends on Wednesday.
The bank is also selling shares in a placement that ends on Thursday and that should raise 3.2 billion euros to be successful.
The bank had pinned its hopes on Qatar's sovereign wealth fund putting in 1 billion euros in the cash call, but sources have said the fund has not decided yet whether to invest.
If Monte dei Paschi fails to pull off its own privately-funded rescue, a government bailout could come as early as this week after Rome decided to seek parliamentary approval to borrow 20 billion euros to prop up the Tuscan bank and other ailing lenders.
(Reporting by Gianluca Semeraro, editing by Silvia Aloisi and Adrian Croft)