ROME, Jan 8 (Reuters) - Italy’s stock market regulator has asked Monte dei Paschi di Siena whether it intends to challenge in court a decision by its top shareholder to delay a rights issue, a source familiar with the matter said on Wednesday.
The world’s oldest bank, reeling from derivatives losses and weakened by years of economic crisis, needs fresh capital to pay back part of the 4.1 billion euros ($5.58 billion) in aid it received last year from the government.
But plans for the rights issue were disrupted in December when the main shareholder foundation forced a share sale to be delayed until mid-May, defying Chairman Alessandro Profumo, who was pressing for the operation to be wrapped up in January.
Consob wrote to the Siena-based bank to ask whether it considered the outcome of the meeting legitimate and if not, would go to court to safeguard the interests of the bank and all its shareholders, said the source with knowledge of the letter, dated Jan. 2.
If Monte Paschi asked a court to annul the delay it would lead to an unprecedented showdown between a bank and its top shareholder and may cloud Profumo’s turnaround plans in more uncertainty.
The source with knowledge of the letter and another source close to the matter said Monte dei Paschi would discuss the legal option, together with a resignation threat by Profumo and CEO Fabrizio Viola, at a Jan. 14 board meeting.
Consob and Monte dei Paschi declined to comment.
The foundation, which has 340 million euros in debt to repay, says a cash call in January would have massively diluted its holding.
Profumo and Viola, in turn, say delaying the fundraising makes it harder because it would likely coincide with a string of cash calls by other Italian and European lenders triggered by a sector health check, and could precipitate the Tuscan bank’s nationalisation.
The bank has also said the postponement will cost it 120 million euros in interest payments on the state loans it received as part of the bailout.
But starting legal proceedings would take time and may not speed up the recapitalisation process, said another source close to the matter.
“If I ask a court to annul the decision, I also need to call another shareholder meeting. The timing (of the cash call) would not change that much (from May),” the source said. ($1 = 0.7353 euros) (Additional reporting by Paola Arosio in Milan, writing by Silvia Aloisi, editing by Paola Arosio and Louise Heavens)