* Shareholders force postponement of cash call to mid-2014
* Bank needs 3 bln euro cap hike to repay state aid
* Management had wanted to launch cash call next month
* Chairman Profumo, CEO Viola to decide whether to step down
By Silvia Aloisi
SIENA, Italy, Dec 28 Italy's third-biggest bank
Monte dei Paschi di Siena was forced to delay a vital
3 billion euro ($4.1 billion) share sale to raise capital until
mid-2014 because of shareholder opposition, plunging its
turnaround plan into uncertainty.
The bank's chairman and its chief executive may now resign
after their plan to launch the cash call in January was defeated
at an extraordinary shareholder meeting on Saturday due to the
vote of Monte Paschi's top shareholder.
The world's oldest bank needs to tap investors for cash to
pay back 4.1 billion euros in state aid it received earlier this
year and avert nationalisation after being hammered by the euro
zone debt crisis and loss-making derivatives trades.
The unprecedented clash between the lender's executives and
its main shareholder - a charitable banking foundation with
close links to Siena politicians - casts a pall over a tough
restructuring meant to revive its fortunes.
Chairman Alessandro Profumo, a strong-willed and
internationally respected banker who was formerly the chief of
UniCredit, said he and CEO Fabrizio Viola would decide
in January whether to step down.
"These are decisions one takes in cold blood and in the
right place," Profumo said at the meeting.
"What I have on my mind is a 3 billion euro cash call
because we need to pay back 4 billion euros to taxpayers. Today
this is uncertain and at risk," he told a press conference.
Viola, sitting at his side, told reporters he would do
everything "so that the ship does not sink", but that he could
not take responsibility for mistakes made by others.
A board meeting is scheduled for mid-January, a bank
Profumo and Viola had already secured a pool of banks ready
to guarantee the rights issue, but only if it was carried out by
the end of January.
They said delaying it would make fundraising 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.
But the cash-strapped Monte dei Paschi foundation - whose
stake in the bank is big enough to veto any unwanted decision -
forced a postponement until at least mid-May to win more time to
sell down its 33.5 percent holding and repay its own debts.
An aide described the 56-year-old Profumo, who quit
UniCredit in 2010 after clashing with that bank's foundation
shareholders and joined Monte dei Paschi in April 2012, as "very
Italian newspapers said former European Central Bank
policymaker Lorenzo Bini Smaghi and Carlo Salvatori, chairman of
the Italian unit of German insurer Allianz, were among
possible candidates to replace him if he stepped down.
Antonella Mansi, a feisty 39-year-old businesswoman recently
appointed head of the Monte dei Paschi foundation, said her
insistence on a cash call delay did not amount to a
no-confidence vote in the bank's management.
But she said that carrying out the capital increase in
January would massively dilute the foundation's holding, leaving
it with virtually nothing to sell to reimburse debts of 340
"We have a precise duty to ensure (the foundation's)
survival. You can't ask us to let it collapse," she said.
Analysts however said a delay, and the possibility of
Profumo resigning, might undermine the whole rescue of the bank.
"It's important to carry out the capital increase as early
as possible," said Roberto Lottici, fund manager at Ifigest.
"The risk is that the bank finds itself rushing into a cash call
later at a lower price than what it could achieve now."
The rights issue, along with a painful restructuring plan,
is among the conditions the European Commission imposed before
giving its green light to the state aid for Monte dei Paschi.
But in Siena, where the bank is known as "Daddy Monte" and
is the biggest employer, fears that the cash call might sever
the umbilical cord between the lender and the city run high.
Siena mayor Bruno Valentini, whose city council is the top
stakeholder in the Monte dei Paschi foundation, said on Friday a
postponement might help keep the bank in Italian hands.
"We cannot let the third biggest bank in this country fall
prey to foreign interests," he said. "Monte dei Paschi is not
just an issue in Siena, it is a big national issue."
Several small shareholders at the meeting echoed that view,
although one, Luigi Barile, accused the foundation of pushing
the lender "to the edge of a precipice".
Under the agreement with Brussels, if Monte dei Paschi
cannot complete the capital increase by the end of 2014 the
Treasury would convert the bonds it bought from the bank into
shares, effectively nationalising it.
The bank, which is cutting 8,000 jobs and shutting 550
branches, said a delay in the cash call would cost it at least
120 million euros in interest payments owed to the state on the
bonds. ($1 = 0.7303 euros)