MILAN (Reuters) - Italy’s third biggest bank, Monte dei Paschi (BMPS.MI), said on Thursday it had finally received a controversial four billion euro ($5.1 billion) state bailout it needs to boost its capital base.
The bailout had become a political hot potato for the outgoing caretaker government led by Mario Monti in the run-up to this week’s elections, following a scandal on loss-making derivative trades carried out by the bank’s previous management.
The derivatives are now at the heart of a high-profile judicial probe into possible fraud and bribery by the bank’s former executives, who are also accused of misleading regulators over the 2007 acquisition of smaller peer Antonveneta.
In a statement, Monte dei Paschi said it had sold 4.07 billion euros of special bonds to the treasury a day before a March 1 deadline for the bailout to come into force.
These include 2 billion euros of new bonds and 1.9 billion euros of bonds that will replace existing state loans. The final amount also includes a 171 million euro coupon the bank will pay to the treasury on those existing state loans for 2012.
The coupon on the loans is 9 percent, rising by 0.5 percentage points every two years up to a maximum of 15 percent.
From this year, if Monte dei Paschi is not able to pay the coupon in cash, it will have to issue shares to the treasury for an equivalent amount - paving the way for partial nationalization.
Monte dei Paschi requested the state aid in June after failing to meet tougher capital requirements set by European regulators.
The shares extended gains after Monte dei Paschi’s statement and were up 2.2 percent at 0.21 euros by 1402 GMT.
However, the bailout still faces a legal challenge by consumer watchdog Codacons, which wants it halted.
Codacons said on Wednesday it had appealed against a court ruling in which the government was given the green light to grant the aid.
A decision by the appeals court is due on March 22.
($1 = 0.7628 euros)
Writing by Silvia Aloisi; editing by Keith Weir