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Categorized | Banks

Monte dei Paschi shareholders approve €5bn recap plan

Posted on November 24, 2016

Shareholders at Italy’s Monte dei Paschi di Siena have voted in favour of the lender’s €5bn recapitalisation and a restructuring of its €28bn in gross non-performing loans, it said in statement on Thursday.

Monte Paschi, Italy’s third largest bank by assets, will launch a debt-for-equity swap from Monday, through which the bank hopes to raise up to €1.5bn, say senior bankers. It plans to raise the rest of the capital in a share sale.

Looming over the deal is an Italian referendum on constitutional reform on December 4 which senior bankers say will be decisive to plan’s success.

If a “No” vote wins – as polls indicate – senior bankers say Monte Paschi’s recapitalisation plan will not find backers and the Italian government will either end up taking a stake in the bank or the lender will have to undertake a mandatory debt for equity swap, in both cases forcing burden sharing on some investors.

Senior bankers say a “Yes” vote could see Qatar putting as much as €2bn into the bank as part of a relationship building exercise with the Italian government.

JP Morgan and Mediobanca are advising on the deal.

The shareholder meeting also voted Alessandro Falciai as chairman of Monte Paschi. He replaces Massimo Tononi who quit the role after only a year in the job following the ousting of former chief executive Fabrizio Viola under pressure from the Italian Treasury and JP Morgan.

Marco Morelli, a former Bank of America Merrill Lynch and JP Morgan banker, took over as CEO in September.