December 23, 2016 / 12:47 AM / a year ago

Italy's Monte dei Paschi says will request a state bailout

MILAN (Reuters) - Italy’s Monte dei Paschi di Siena (BMPS.MI) said on Friday it would request a capital injection from the state after failing to raise 5 billion euros ($5.2 billion) it needed from private investors to stay afloat.

The request came just minutes after the government announced the creation of a 20 billion euro fund to help ailing lenders in the wake of Monte dei Paschi’s failure to raise sufficient capital in the market.

    Monte dei Paschi said in a statement it would request a so-called precautionary public recapitalisation, which, under European Union rules aimed at shielding taxpayers, entails a forced conversion of the bank’s junior bonds into shares.

    However, to prevent an outcry from retail savers, the bank said it would put forward a specific proposal for high street investors who had bought into a 2 billion euro junior bond that it issued in 2008.

    Reporting by Valentina Za; Editing by Crispian Balmer

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