March 27, 2009 / 7:25 AM / 11 years ago

UPDATE 2-Italy's Monte Paschi seeks govt aid, net falls

* To issue 1.9 bln eur bonds under capital-boosting scheme

* Net 953 mln eur incl. integration charges, writedowns

* 2008 dividend 0.013 euro per share

* Sees Tier 1 capital ratio 7.1 pct after bond issue

(Adds shares, analyst comments, Tier 1)

MILAN, March 27 (Reuters) - Italy’s Banca Monte dei Paschi di Siena (BMPS.MI) will seek 1.9 billion euros ($2.6 billion) of state aid, but will pay out a small 2008 dividend despite a net profit drop, the bank said on Friday.

The Siena-based bank, the world’s oldest, joins a raft of Italian lenders in saying it will take part in the 10 billion to 12 billion euro government-sponsored bond programme.

The scheme is aimed at shoring up capital ratios and assuring credit to small businesses and individuals as the economy, the euro zone’s third biggest, is mired in recession.

The involvement of Monte dei Paschi, Italy’s number-three bank by market value, raises the amount banks have asked for under the scheme to about 9 billion euros.

Group net profit was 953 million euros, down from 1.37 billion euros the year before, the bank said in a statement. The 2008 figure includes integration charges and asset writedowns.

The shares trimmed early gains to rise 1.47 percent at 1.107 euros at 0904 GMT. Analysts said the stock was boosted by the 2008 dividend of 0.013 euro a share.

The dividend is down 94 percent from the year before but some analysts had been expecting no payout. The DJ Stoxx banks index .SX7P was 0.79 percent higher.

The “real positive” in the results are the 8.2 percent rise in net interest income, said an analyst with a Milan bank who asked not to be named.

The state-backed bond issue was also higher than the analyst’s expectations. A bank source told Reuters on Thursday Monte Paschi had approved an issue of around 2 billion euros.

The boost will raise Monte Paschi’s Tier 1 ratio, a measure of capital strength, to 7.1 percent from 5.6 percent, Monte dei Paschi said.

Monte dei Paschi plans to repay the bonds by June 2013.

The Tier 1 ratio will climb another 100 basis points with asset sales, according to a slide prepared for a presentation to analysts available on the bank’s website.

The bank said it had seen “good performance” in its finance and bancassurance business in the first two months of the year. As of February, direct funding was up 9.8 percent year on year.

Operating costs were foreseen to drop at least 3 percent this year.

Monte dei Paschi had an estimated price/earnings ratio of 8.83 on 2008 results, below the Italian sector average. ($1=.7366 Euro) (Reporting by Ian Simpson and Nigel Tutt in Milan and Stefano Bernabei in Rome; Editing by Simon Jessop and Jon Loades-Carter)

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