* Top shareholder halved holding after 12 pct stake sale
* Bank planning 3-bln euro rights issue in May
* Fragmented ownership makes it takeover target-analysts
* Investors interested in assets in peripheral Europe
By Valentina Za and Stefano Bernabei
MILAN/ROME, March 19 Banca Monte dei Paschi di
Siena is becoming a potential takeover target after
its biggest shareholder halved its controlling stake in Italy's
The cash-strapped Monte dei Paschi foundation has sold 15
percent of the bank, likely to more than one buyer, and will cut
its holding further in a 3 billion euro ($4.2 billion) cash call
needed to avert nationalisation.
Analysts at Italian broker Equita SIM on Wednesday said
Monte dei Paschi's shareholder structure had become more
fragmented as a result of the foundation's sale, which made the
bank more attractive to would-be buyers.
"This increases the speculative appeal of Banca Monte dei
Paschi which, after the capital increase, will become the
easiest takeover target (among Italian banks)," they wrote in a
note to clients.
Monte dei Paschi, the world's oldest bank, was bailed out by
the state with 4.1 billion euros of aid last year after being
hit by the sovereign debt crisis and a derivatives scandal.
The foundation, a politically connected body that until
early 2012 owned nearly half of the bank, sold 12 percent of its
holding on the market on Tuesday and other small chunks in
The sale enables the foundation to pay off debts of around
300 million euros ($417 million) and clears the way for the
rights issue that the foundation had delayed until May while it
found a buyer for its shares.
The head of the foundation, Antonella Mansi, told Reuters in
an interview on Wednesday she did not know who had bought the
bank's shares, but that it was probably more than one player.
Improving growth prospects in weaker euro zone countries
have attracted cash from investors fleeing emerging economies
this year, and Monte dei Paschi is seen as a cheap play on
Italy's economic recovery - despite the challenges it faces.
It would also be easier to take over than rivals UniCredit
and Intesa Sanpaolo, the country's top two
banks, Equita analysts said.
UniCredit has a cap on voting rights, which acts as a
deterrent to potential purchasers, while various banking
foundations together control nearly 25 percent of Intesa
Monte dei Paschi, the country's third-largest bank by
branches, removed a cap on voting rights last year.
Equita also said the bank is a more appealing target than
Italy's cooperative banks where investors have only one vote
each regardless of the size of their stake.
Monte dei Paschi has lost more than 9 billion euros in the
last three years and will not pay a dividend until 2016.
The rights issue is part of a tough restructuring demanded
by Europe and the bank still risks being nationalised if it
cannot pay back the bulk of the state aid this year.
Still, Monte dei Paschi's stock has risen 37 percent in the
last month, outperforming a 28 percent gain in Italy's banking
sector and hitting the 24 euro cents a share at
which the foundation values its stake.
The foundation gave no details about its share sales.
Italian media cited U.S. investment fund Blackrock,
which this month became the top shareholder in UniCredit as a
possible buyer. The world's largest money manager is also the
second-biggest investor in Intesa Sanpaolo. U.S. funds JC
Flowers and Och-Ziff were also cited.
A BlackRock representative in Italy declined to comment, as
did Och-Ziff, which earlier this month denied media reports that
the fund had bought an 8 percent stake. Reuters was unable to
reach JC Flowers for comment.
Mansi said the foundation aimed to keep a small stake in the
Tuscan bank and may even take part in the capital increase.
She said she was still looking for a partner for part of the
foundation's remaining stake to help relaunch the bank.
Monte dei Paschi declined to comment.
($1 = 0.7188 Euros)
(Editing by Erica Billingham)