(Adds CFO quotes and details)
By Stephen Jewkes
MILAN Nov 29 Monte dei Paschi <BMPS.MI > is in
a race against time to secure a commitment from a cornerstone
investor by the weekend before tapping the market for
much-needed funds, CFO Francesco Mele said on Tuesday.
Its shares have been hammered by worries over its ability to
execute a 5 billion euros ($5.3 billion) capital raising, with
some fund managers saying sentiment could brighten if it finds
an anchor investor.
Sources said Qatar Investment Authority was in talks and
could inject up to 1 billion euros but wanted to wait until the
outcome of a Dec. 4 constitutional referendum to take a final
"We have a number of advanced discussions," Mele told an
investors' conference call, without mentioning any specific
"If we get to Monday with a good anchor commitment we should
be able to complete the transaction successfully," he said.
The bank launched a voluntary debt-to-equity swap offer on
Monday on 4.3 billion euros of subordinated notes.
The debt swap is central to a broader capital boosting plan
funded by private investors to keep it afloat, after it fared
the worst in European bank stress tests in July.
The chances of success will also hinge on the Dec. 4 vote,
which could unseat Matteo Renzi's government, triggering
political uncertainty and scaring off investors.
Mele said it would be up to banks in the underwriting
consortium to decide on Monday if the conditions were in place
to proceed with the deal.
The Chief Financial Officer, who arrived at the bank in
October just after Marco Morelli took the helm as Chief
Executive Officer, said European Central Bank approval for the
cash call was subject to the lender launching its share sale by
the end of the year.
Should the privately-funded plan fail, the state would
probably have to launch a precautionary recapitalisation of the
bank under conditions set by the European Commission for state
aid, he said.
But before the state injected public money, investors would
first take a hit, Mele said, adding the European Commission
would ask for "burden sharing", affecting only shareholders and
junior bondholders -- a much milder solution than a complete
Sources told Reuters last week that authorities would apply
EU rules with flexibility in case of state aid for Monte dei
Paschi to avoid perverse effects on the whole Italian banking
($1 = 0.9396 euros)
(Additional reporting by Pamela Barbaglia and Paola Arosio;
writing by Francesca Landini; Editing by Ruth Pitchford)