LONDON/MILAN Oct 16 Banca Monte dei Paschi di
Siena will sound out foreign investors in London over
the next few days to raise support for a hefty 2.5 billion euro
($3.37 billion) capital increase that the troubled Italian bank
must complete next year.
UBS, which is advising the Tuscan lender on the
much-needed cash call, is to lead the round of contacts that
will in any case be preliminary, a financial source told Reuters
Monte dei Paschi, Italy's third-largest bank by assets, was
forced to take 4.1 billion euros of state aid to stay afloat
after getting hammered by the euro zone crisis and a set of
hazardous derivatives deals now at the centre of a criminal
investigation in Italy.
The European Commission, which rules on state aid in the
European Union, has demanded the bank carry out the capital
increase, which is more than twice the amount originally
envisaged, in exchange for approving the rescue plan.
The EU's executive has also requested a tougher
restructuring plan, which Monte dei Paschi unveiled earlier this
Failure to convince investors to subscribe to the capital
increase will result in nationalisation of the bank as the state
aid was offered in the form of convertible loans that would be
turned into equity.
So far French Insurer Axa, which has a
long-standing partnership with Monte dei Paschi and is also an
investor, has said it will join the planned capital hike, taking
a stake that it is proportional to its 3.73 percent investment
in the Siena lender.
Monte dei Paschi Chief Executive Fabrizio Viola said earlier
this month a formal road show with investors was likely to start
only after the bank's third-quarter results on Nov. 14.
Monte dei Paschi declined to comment.
($1 = 0.7412 euros)
(Reporting by Sophie Sassard in London and Silvia Aloisi in
Milan, Writing by Lisa Jucca; editing by David Evans)