SIENA, Italy (Reuters) - The top shareholder in Monte dei Paschi dei Siena (BMPS.MI) is open to the idea of a merger of the troubled Italian bank with another financial group, preferably "of an international standing", it said in a document approved by its board this month.
The comment is a major strategic shift for the Monte Paschi foundation, a not-for-profit body with close ties to local politicians, which now has a 33.5 percent stake in the world's oldest bank after being forced to sell down its majority holding to pay off its debts.
The bank in turn risks nationalization unless it can persuade private investors to buy into a 2.5 billion-euro ($3.4 billion) share issue next year.
Its share price extended gains after parts of the document were leaked and closed 6.6 percent higher at 0.2330 euros.
The cash-strapped foundation, which has its Monte dei Paschi stake valued at 0.24 euros per share in its books, is seeking to reduce its holding in the bank to pay back 350 million euros of debts and has already said it will not take part in the capital increase.
In the document, dated October 15 and setting out its strategic priorities through 2017, the foundation said it did not want to sell its stake "in dribs and drabs". At current market prices it would have to sell a stake of nearly 15 percent to fully repay its debts.
It said among the options it was considering were selling on the market or to one or more investors. It also mentioned the possibility of "extraordinary operations, such as a merger (of the bank) with other financial groups, preferably of international standing."
In a statement late on Thursday, requested by market watchdog Consob, the foundation said leaks about the content of the document had been published in a "disorderly and fragmented" manner.
It posted on its website the full document, which also lists as options under consideration the renegotiation of its debt terms with creditors and the selling of all its financial and real estate assets.
Banking sources say the foundation must find a buyer for a big chunk of its stake quickly, because the looming share issue could put pressure on the price. ($1=0.7262 euros)
Writing by Silvia Aloisi; Editing by Greg Mahlich and Anthony Barker