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Daily digit: Capital hike at Italy bank

Sunday, September 08, 2013 - 01:00

Sept 9 - Italy's Monte dei Paschi di Siena will seek 2.5 billion euros ($3.3 billion) in fresh capital from investors to shore up its finances, an amount that is more than double its original plan and makes nationalisation more likely should the cash call fail. Sonia Legg reports.

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2.5 billion euros is today's daily digit - the amount Italy's Monti dei Paschi bank will seek in fresh capital from investors. That's double what it originally planned to raise to shore up its finances and makes the prospect of nationalisation far more likely. The world's oldest bank - and Italy's third biggest - is still grappling with the aftermath of a massive derivativies scandal. Later this month it's due to approve a tough restructuring plan in order to qualify for a 4 billion euro state bailout. The bank is worth as much as the capital increase and many analysts believe it won't be able to raise the 2.5 billion within 12 months given the current economic climate in Italy. A debt to equity swap, converting bonds into shares, may be one answer for the 540-year-old bank. It's fairer on tax payers and in line with new bank bailout guidelines. But stock fell three percent in early Monday trade - and many politicians and business leaders will be watching developments closely - many have close links with the historic lender.

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Daily digit: Capital hike at Italy bank

Sunday, September 08, 2013 - 01:00