MILAN (Reuters) - A planned investment by Italian banking industry rescue fund Atlante to buy bad loans off Monte dei Paschi di Siena (BMPS.MI) will go ahead only if the state takes part in the troubled bank’s cash call for no more than 1 billion euros and without triggering state aid rules.
Monte dei Paschi is racing against the clock to raise 5 billion euros ($5.2 billion) in capital by the end of December and avoid either a state bailout or being wound down by the European Central Bank.
The rescue plan agreed with the ECB entails also the sale of 27 billion euros in gross bad loans in a deal which hinges on a crucial 1.5 billion euro investment by Atlante.
In a document published on Wednesday on its website the bank said Atlante’s investment was subject to a limited contribution by the state to support the cash call and the fact that this did not trigger European Union rules that require imposing losses on investors before allowing state aid.
The state has a 4 percent stake in Monte dei Paschi and can buy into the cash call. A EU source has said there is no exact limit to the state’s participation as long as it is carried out at market conditions.
($1 = 0.9607 euros)
Reporting by Valentina Za