MILAN/ROME The top investor in troubled Italian bank Monte dei Paschi di Siena (BMPS.MI) said it would only support the lender's planned January share issue if it is postponed to the second quarter of next year, throwing the operation into doubt.
The Monte dei Paschi foundation, which holds 33.5 percent of the bank, has been seeking to sell all or part of its stake to pay back around 350 million euros ($478.9 million) of debt, but has so far failed to find a buyer and is keen to win more time.
Monte dei Paschi, by contrast, wants to launch the share issue as soon as possible. A preliminary commitment by a pool of banks to underwrite the cash call expires at the end of January.
The cash call is required as part of a restructuring demanded by the European Commission for approving state aid, which Monte dei Paschi received earlier this year.
The size of the rights issue is higher than the lender's stock market value, which has fallen to 1.96 billion euros after a string of negative sessions for the stock.
If no capital increase is launched by January 31, the pre-underwriting agreement with the banks would end and Monte dei Paschi would have to restart negotiations to form a new consortium guaranteeing the rights issue, the bank has said.
The board of the Monte dei Paschi foundation said on Friday that the 3 billion euro rights issue proposal, to be voted on at a December 27 shareholders meeting, needed to be delayed to after May 12.
"Should the capital increase implementation be maintained for the first quarter of 2014, the vote of the MPS Foundation will be contrary to that proposal," it said in a statement.
Shares in Monte Paschi have lost nearly 13 percent this week with traders citing uncertainty over the foundation's moves and the prospect for the rights issue. They closed at 0.1630 euros on Friday, down almost 3 percent on the day.
"There is uncertainty over whether the capital hike will go through and the stock is likely to fall more as we approach the December 27 date," a Milan-based trader said earlier.
The foundation's options are limited. If Monte dei Paschi's shares fall further to around 0.12 euros, its stake in the lender could be seized by creditor banks, some of which are also part of the pool of 10 banks, led by UBS UBSN.VX, ready to guarantee the capital increase.
"Several times we have told the foundation to sell its shares and not to wait until the stock price was under pressure," said a source close to the foundation's creditors.
Monte Paschi was kept afloat by the bailout earlier this year, plugging a capital shortfall which arose after the bank was hit hard by the euro zone debt crisis. It is on track to post its third straight annual loss.
The bank is also at the center of a judicial probe over its costly acquisition of smaller rival Antonveneta in 2007 and loss-making derivatives trades it made in the deal's aftermath.
($1 = 0.7308 euros)
(Writing by Silvia Aloisi and Gavin Jones; Editing by Anthony Barker and David Holmes)