Italy's MPS to open data room next week but needs time-sources

ROME/SIENA (Reuters) - State-owned Monte dei Paschi is expected to grant access to confidential data to potential merger partners within days, three sources familiar with the matter said on Wednesday.

FILE PHOTO: FILE PHOTO: The entrance of Monte dei Paschi headquarters in Siena, Italy, October 27, 2017. REUTERS/Stefano Rellandini/File Photo/File Photo

The opening of the data room, which marks the formal start of the Tuscan bank’s re-privatisation process, comes as Italy faces a government crisis after a junior coalition party on Wednesday withdrew its ministers from the cabinet.

Monte dei Paschi (MPS) has unveiled an up to 2.5 billion euro ($3 billion) capital shortfall and is due to present a plan to fill it to the European Central Bank by the end of the month.

While the Treasury presses on with efforts to meet pledges made to Brussels when it rescued MPS in 2017, the people said, Rome would only be able to present a broad outline of planned measures for the bank and counted on winning more time from the ECB.

To secure a lasting solution to the bank’s woes, the Treasury is keen to strike a merger deal for MPS and has been focusing on UniCredit as the ideal partner.

With UniCredit now in the process of picking a new chief executive after CEO Jean Pierre Mustier said in November he would step down by mid-April, MPS is looking also at possible alternatives.

MPS said on Monday its advisers would explore options in light of the opening of the data room. In addition to UniCredit, Banco BPM, BPER Banca, Credit Agricole Italia and BNL-BNP Paribas will be sounded out, two of the sources said.

Asked about the list of names, both MPS’ advisers, Mediobanca and Credit Suisse, declined to comment.

Banco BPM at present does not include MPS among possible merger options, but its advisers stand ready to assess the situation were they to be contacted, a source close to Banco BPM has said.

BPER Banca declined to comment. Credit Agricole Italia and BNL-BNP Paribas were not immediately available for comment.

A financial source said Credit Agricole Italy, which plans to launch a takeover bid for smaller rival Creval, had no interest in MPS.

Entering the data room entails signing a confidentiality agreement, a step that UniCredit has not taken despite contacts with the Treasury over the terms of a possible deal.

Rome has been working on a package of measures that would ensure a deal would not harm a buyer’s capital reserves, a key condition set by UniCredit that, according to a fourth source familiar with the matter, would also apply to any other bank.

But the main hurdle to a sale is about 10 billion euros in damage claims facing MPS after decades of mismanagement.

The Fondazione MPS in July filed 3.8 billion euros in extra-judicial claims against the bank, which the Treasury is hoping could be dropped as part of a settlement deal.

Chairman Carlo Rossi on Wednesday said the foundation planned to start legal action over those claims, though it remained open to discussions.

($1 = 0.8214 euros)

Reporting by Giuseppe Fonte in Rome, Valentina Za in Milan and Silvia Ognibene in Siena; Additional reporting by Andrea Mandala; Editing by Elaine Hardcastle and Steve Orlofsky