Italy's Monte dei Paschi considers bigger cash call

MILAN/ROME Tue Apr 15, 2014 4:42am EDT

The entrance of Monte Dei Paschi bank headquarters is pictured in Siena January 24, 2013. REUTERS/Stefano Rellandini

The entrance of Monte Dei Paschi bank headquarters is pictured in Siena January 24, 2013.

Credit: Reuters/Stefano Rellandini

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MILAN/ROME (Reuters) - Italy's Banca Monte dei Paschi di Siena (BMPS.MI) is considering increasing the size of its planned share sale to help it pass a euro-zone wide bank health check and repay state aid this year.

Late on Monday, Italian news agency ANSA said Italy's third-largest lender was looking to tap investors for up to 5 billion euros ($6.9 billion), more than the 3 billion planned.

On Tuesday, Monte dei Paschi said it was evaluating how much capital it needed in light of the European Central Bank's asset review and also after discussions with Italy's banking supervisor, the Bank of Italy. Monte dei Paschi declined to confirm whether it was aiming to raise 5 billion euros.

"The bank is assessing the implications in relation to the amount of funds necessary to pay back this year state-aid as pledged with the European Commission," it said.

Shares in the Tuscan bank dived at the start of trading and were down 8.5 percent by 0800 GMT (4 a.m. EDT).

Eight Italian banks, including Monte dei Paschi, have announced they are planning to raise a total of 8 billion euros on the market to strengthen their capital base and pass the European-wide bank asset review.

Monte dei Paschi was forced to take 4.1 billion euros in state aid last year after it suffered heavy losses in the euro zone debt crisis and was hit by a derivatives scandal.

The bank is expected to launch its capital raising late in May. But an increase in the size of the rights issue would push the exercise back to June or later. ($1 = 0.7238 Euros)

(Writing by Lisa Jucca; Additional reporting by Valentina Za)

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