April 10, 2019 / 12:31 PM / 12 days ago

Activist investor to propose damages claim against Monte Paschi board members -letter

MILAN, April 10 (Reuters) - An activist investor in state-controlled Italian bank Monte dei Paschi di Siena plans to propose legal action against the lender’s chief executive, chairwoman and three other members of the board.

Monte dei Paschi CEO Marco Morelli is seeking to restructure the bank to make it a more attractive merger target and give the state a way out - as demanded by European Union rules - after a 2017 bailout that left the treasury with a 68 percent stake.

However, some bankers say that potential legal claims over alleged past mismanagement at Monte dei Paschi could be an obstacle to any tie-up.

In a letter to the country’s economy minister investor Bluebell Partners said it would ask the bank’s shareholders at Thursday’s annual general meeting to back its proposal to seek damages from the five board members for failing to set aside enough money for potential legal claims in its 2018 accounts.

The proposed legal action would target Morelli, Chairwoman Stefania Bariatti and three other board members, Bluebell representative Giuseppe Bivona said in the letter, seen by Reuters.

A Monte dei Paschi spokesman declined to comment.

In his letter Bivona asked Economy Minister Giovanni Tria, who is under fire from within the ruling coalition led by the right-wing League and the anti-establishment 5-Star Movement, to choose between the interests of the bank’s executives and those of savers.

The bank said in its annual report last month that potential legal claims against it for alleged past mismanagement totalled 5 billion euros ($5.6 billion) at the end of last year, of which 2.5 billion euros were classified as having higher likelihood of causing financial damage to the lender. It added that the European Central Bank had launched an audit of Monte dei Paschi in January to assess and manage the Italian lender’s operating and legal risks.

Bluebell Partners, which holds only 25 shares in the bank, has already said it will ask shareholders to vote in favour of a damages claim against the lender’s former CEO and chairman Fabrizio Viola and Alessandro Profumo.

Deputy Prime Minister and 5-Star party leader Luigi Di Maio last week said that the government would assess whether to back that request and that those responsible for the bank’s distress “should pay”. A similar proposal by the same investor was rejected by shareholders at last year’s AGM and in 2016. ($1 = 0.8872 euros) (Reporting by Silvia Aloisi Editing by David Goodman)

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