MILAN, Jan 21 (Reuters) - The fall in the spread between Italian 10-year bonds and their German equivalent has helped the capital position of Italy’s Banca Monte dei Paschi di Siena , the lender’s chairman said on Monday.
“The reduction in the spread has helped us a lot, since with a spread of 250 basis points our capital deficit has been reduced by a lot,” Chairman Alessandro Profumo said at a conference.
Monte Paschi, the world’s oldest bank, was hit hard by the euro zone crisis because it holds some 25 billion euros ($33.29 billion) of Italian government bonds.
The bank was forced to request 3.9 billion euros in state aid last year after failing to meet tougher capital requirements set by the European Banking Authority.
The need for state help was based on a capital shortfall of 3.3 billion euros.
Profumo, a former chief executive of UniCredit, Italy’s biggest bank by assets, said Monte Paschi needed to keep cutting costs significantly if it was to offset an expected fall in revenues.
Monte Paschi, which in 2011 had costs totaling some 3.5 billion euros, is targeting costs of 2.9 billion euros in 2015.
Profumo also said the lender’s shares had risen earlier this month due to short covering trade which had been triggered by falling bond yields.
$1 = 0.7510 euros Reporting By Silvia Aloisi; writing by Stephen Jewkes; Editing by Leslie Adler