MPS Foundation confirms debt repayment agreement
Monte dei Paschi di Siena (MPS) Foundation, the controlling shareholder of Italian third largest bank Banca Monte dei Paschi di Siena, has confirmed it has reached a temporary agreement with its creditors on the repayment of the €1bn debts owed by the institution.
Initially scheduled in March, the standstill agreement between MPS and the 11-bank creditor consortium was postponed a number of times, and expired on June 18.
According to a statement released by the Foundation, the institution will make an initial payment of €664m, reducing its outstanding debt to €350m.
The credit line will be closed by June 2017, with a possible extention to June 2018
The agreement is subject to a final approuval expected to be announced over the next days.
Meanwhile, Standard & Poor’s has put Monte dei Paschi di Siena on negative credit watch, citing deteriorating asset quality, weakened earnings and capital needs.
“MPS’ asset quality has deteriorated more than that of its domestic peers during the recent economic downturn,” the rating agency said.