Government could take stake in Italy’s MPS, analysts warn

Italy’s Banca Monte dei Paschi di Siena (MPS) could face a reduction in assets controlled by its shareholders, which would see the government directly taking a stake in the country’s third biggest bank.

The bank is currently controlled by Fondazione Monte dei Paschi di Siena, the banking foundation which holds a 36% stake, while all other investors are limited to ownership below 4%.

According to Alessandro Profumo, chairman at the bank, the foundation would be ready to reduce its stake. Speaking with the local press, Profumo didn’t deny the possible direct involvement of the government.

The bank recently re-launched a plan to sell bailout bonds to the Italian government in order to boost its capital, a decision driven by a €3.3bn capital shortfall found by the European Banking Authority.

Monte dei Paschi holds about €25bn Italian sovereign bonds.

During the presentation of the bank’s business plan in June, Profumo and Fabrizio Viola, Monte dei Paschi’s chief executive since January, also confirmed the decision ask shareholders to approve a €1bn cash call.

The bank is expected to publish its results on August 28, and a number of analysts suggested that Monte Paschi will sell a stake to the Treasury to pay its interest on the debt in case it will post a loss.

Meanwhile, the bank has announced its decision to sell a 60% stake of its unit Biverbanca.

A cost reduction plan, strongly opposed by local unions, will imply 4,600 job cuts and a reduction of 400 branches.

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