MILAN, Sept 23 Banca Monte dei Paschi di Siena
has said it will not pay coupons coming due at the end
of the month on three hybrid loans, as requested by European
authorities as a condition for a state bailout.
Italy's third biggest bank, brought close to collapse by the
euro zone debt crisis, is set to unveil a turnaround plan this
week. European Union Competition Commissioner Joaquin Almunia
has asked the bank to toughen up a previous restructuring plan.
In a letter sent to the Italian government in July, Almunia
had also said that payments to holders of hybrid and
subordinated debt issued by Monte Paschi had to be "prevented to
the maximum extent legally possible."
Monte Paschi holds a board meeting on Tuesday to approve a
turnaround plan to meet the EU demands.
The bank issued a hybrid financial instrument called FRESH
in 2008 to partly fund its controversial purchase of rival
On Friday, Monte Paschi said it would not pay the next
coupon on Sept. 30 on its MPS Capital Trust II non-cumulative
floating-rate guaranteed convertible FRESH preferred securities.
The bank said it would also withhold the coupon payment on
its Antonveneta Capital Trust I and II non-cumulative floating-
rate guaranteed trust preferred securities, respectively, on
Sept. 21 and 27.
"The suspension of interest payment is permitted, under
certain prerequisites, by the respective regulations" of the
notes, Monte Paschi said in a statement.
(Reporting by Valentina Za. Editing by Jane Merriman)