October 15, 2016 / 5:10 PM / 3 years ago

Monte dei Paschi CEO to analyze alternative offer on capital boosting plan

MILAN (Reuters) - Italy’s Banca Monte dei Paschi di Siena (BMPS.MI) said on Saturday it had received a non-binding proposal on Oct. 13 from former Industry Minister Corrado Passera presenting an alternative plan to boost the lender’s capital.

The entrance of the Monte dei Paschi bank headquarters is seen in Siena, central Italy, January 29, 2016. REUTERS/Max Rossi

On Friday, the bank’s board instructed Chief Executive Marco Morelli to deal with the offer, Monte dei Paschi said in a statement, adding that Morelli had started an in-depth analysis of the proposal.

Two sources told Reuters last week that the former minister was working on a rescue plan proposal for the bank.

The bank is currently working to execute an ambitious turnaround plan based on a 5 billion euro capital-boosting plan and the sale of 28 billion euros’ worth of bad loans.

According to two sources close to the matter, the offer from Passera was short on details and did not mention any possible ‘anchor’ investor interested in injecting capital into the Tuscan bank.

One of the sources said that Passera did not ask for a management change at Monte dei Paschi and that the non-binding offer was based on three measures to strengthen the bank’s capital base.

First, it envisaged a reserved capital increase for anchor investors to raise 2.5 billion euros, the source said.

On top of this, the offer mentioned a 1 billion euro rights issue for Monte dei Paschi’s current shareholders.

Finally, 1.5 billion euros would come from the bank’s retained earnings, the source said.

An initial idea of raising capital through a debt-to-equity conversion of Monte dei Paschi’s subordinated debt appears to have been set aside for the time being.

Passera was not immediately available for comment.

Writing by Francesca Landini; Editing by Kevin Liffey and Hugh Lawson

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