UPDATE 1-Monte Paschi foundation strikes share pact with new Latam investors

Fri Apr 4, 2014 12:41pm EDT

(Adds details, background)

MILAN, April 4 (Reuters) - The former controlling shareholder in Monte dei Paschi di Siena said on Friday it and two new Latin American investors in Italy's third biggest bank had committed to not selling their respective holdings for at least 16 months.

The Monte dei Paschi foundation, a not-for-profit entity, had 33.5 percent in the bank until mid-February - a big enough holding to veto any unwanted decision at the bank - but it has since gradually cut its stake to just 3.1 percent.

On Monday, it sold 6.5 percent of Monte dei Paschi to Fintech Advisory and BTG Pactual Europe.

That has shaken up the bank's shareholder structure and turned the lender into a potential takeover target for the first time in nearly two decades.

In a statement issued on Friday the foundation said it had entered into a shareholder pact with both Latin American investors in order to stabilise the bank's new shareholder base and encourage other investors.

Monte dei Paschi was hit hard by the euro zone debt crisis and a scandal over loss-making derivatives deals and had to request a 4.1 billion euro state bailout last year.

The two funds will buy into a 3.0 billion euro capital increase due to be launched by the bank at the end of May so that their stakes will not be diluted, the statement said, while the foundation is committed to keeping a stake of 2.5 percent.

Fintech, a U.S.-based investment fund owned by Mexican businessman David Martinez that bought 4.5 percent of the bank, has agreed to a 24-month lock-up period during which not to sell its shares.

For BTG Pactual, an asset management unit of the Brazilian investment bank controlled by billionaire financier André Esteves, which purchased another 2 percent, the lock-up will last 16 months.

Since the foundation cut down its holding, the bank's top shareholder has become U.S. money manager BlackRock with a 5.75 percent stake.

Under the pact, the foundation will have the right to propose its own candidate to be the bank's chairman among a joint slate of board nominees, while the two funds would be entitled to choose the chief executive.

However, even if the three currently represent the biggest single shareholder bloc, the victory of their list is not guaranteed as it would need the backing of the majority of shareholders. (Reporting by Silvia Aloisi; Editing by Sophie Walker)

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