FRANKFURT Dec 20 The European Central Bank has
advised Italian bank Monte dei Pasche di Siena to
issue more equity rather than additional debt to the Italian
treasury in case it were not profitable enough to pay the coupon
attached to state aid.
Issuing additional debt to the treasury would burden the
bank further in an environment that is already difficult, the
central bank said in a statement dated Dec. 17 and posted on the
ECB website on Dec. 20.
"This could pose further challenges to the bank's
performance in the near term and impair its capacity to redeem
the NFIs (new financial instruments) in a timely manner," the
central bank said.
The European Commission gave its preliminary approval to a
3.9 billion euros ($5.1 billion) state bailout for Monte dei
Paschi earlier this week, after the bank was forced to request
state aid to bolster its weak capital base. The bank must
present a restructuring plan within six months, the commission
(Reporting By Thomas Atkins)