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Monte dei Paschi's last ditch capital plan

Monday, December 12, 2016 - 01:35

Italy is reportedly ready to pump capital into Monte dei Paschi di Siena if the ailing bank fails to get the money it needs to remain in business from investors. As Sara Hemrajani reports, the bank is still hoping to find private investors now a new government is being put together, offering some political stability.

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The world's oldest bank is stepping up efforts to secure a new lifeline. Italy's Monte dei Paschi says it will press ahead with plans to tap private investors for a 5-billion euro capital increase - and that fundraising will be complete by the end of the year. The troubled lender was dealt a blow on Friday when the ECB refused to give it any more leeway. But a source close to Monte dei Paschi says the prospect of a new government in Rome has given the board a confidence boost. Analysts say that could offer some relief to what's been a long-running crisis. SOUNDBITE: Chris Beauchamp, IG Market Analyst, saying (English): "Well I think the new PM's [prime minister] installation gives a breathing space again to Italian banks. With Italian banks, you have to forgive my cynicism, but t's the problem that everyone says will blow up the eurozone every month and, lo and behold, we move into a new year with Italian banks still looking very, very unhealthy but still not really posing a mortal risk to the stability of the eurozone. It's probably one of those problems that just stays there and finally it does become untenable." Rome is said to prefer a market solution to save the bank since a state rescue would hurt bondholders. But so far investor interest seems weak. SOUNDBITE: Chris Beauchamp, IG Market Analyst, saying (English): "Really, as a whole, Italian banks continue to be the one problem that will afflict the entire eurozone financial system, and that means that they'll probably fall out of investor love, I think, for quite a long time to come." As Monte dei Paschi tries to avoid a bailout, many fear the bank's last-ditch move to go it alone is simply delaying the inevitable.

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Monte dei Paschi's last ditch capital plan

Monday, December 12, 2016 - 01:35