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Italy's Monte Paschi aims to launch cash call on June 9 -sources
May 26, 2014 / 4:40 PM / 3 years ago

Italy's Monte Paschi aims to launch cash call on June 9 -sources

MILAN, May 26 (Reuters) - Italy's third-biggest lender Banca Monte dei Paschi di Siena is aiming to launch its planned 5 billion euro ($6.8 billion) share sale on June 9, several sources familiar with the situation said.

Shareholders agreed to raise the size of the capital increase, initially planned at 3 billion euros, at an extraordinary meeting last week.

The new amount is almost twice Monte dei Paschi's current market value and is intended to help the bank cope with the hit to its finances it expects from a Europe-wide health check of lenders this year.

"Barring last-minute glitches, the all-clear from (market regulator) Consob should come by June 5 and the operation should be launched on the 9th," one of the sources said.

The bank declined to comment.

Chief Executive Fabrizio Viola has said the cash call should be completed by the first half of July.

Monte dei Paschi is one of nine Italian banks under scrutiny from European regulators that are planning to boost their capital base with a share issue or have already done so.

Altogether, Italian banks have announced capital increases for around 11 billion euros, with Monte dei Paschi aiming to raise the single biggest amount.

According to Reuters calculations based on the rights issue prices used by the three banks that have already launched their cash calls - Banco Popolare, Banca Popolare di Milano and Credito Valtellinese - Monte dei Paschi could price its cash call at around 3.5 euros, or a hefty discount of around 85 percent to its current market price.

That would compare with a 46.5 percent discount to the market price used by Banco Popolare, Italy's fourth-biggest lender by branches, to price its 1.5 billion euro cash call in April. ($1 = 0.7325 Euros) (Reporting by Stefano Bernabei; Writing by Silvia Aloisi; Editing by Erica Billingham)

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