Monte dei Paschi's bad bank plan no state aid - EU antitrust chief

FILE PHOTO: EU Commission Vice-President of the European Commission Margrethe Vestager speaks during a news conference in Brussels, Belgium, May 13, 2020. Olivier Hoslet/Pool via REUTERS

BRUSSELS (Reuters) - The European Union's competition chief Margrethe Vestager said on Friday that a plan by Italy's Banca Monte dei Paschi di Siena BMPS.MI to create a bad bank to manage its soured loans was no state aid.

A source close to the matter said earlier on Friday that Monte dei Paschi had received a preliminary green light from the EU’s competition watchdog for its bad debt disposal plan.

“We have been in contact with Italian authorities on this question and valuation of assets being transferred, as far as we can see this is no aid operation,” Vestager said.

“It was decided before the Covid-19 crisis broke out,” she said, adding that it was up to every EU member state to notify the watchdog about potential state aid risk and so far such notification had not come from Italy.

(This story removes superfluous letter in third paragraph)

Reporting by Foo Yun Chee, writing by Agnieszka Flak, editing by Maria Pia Quaglia