Monte Paschi seeks new investor as scandal deepens

Sun Jan 27, 2013 2:43pm EST
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By Gavin Jones and Danilo Masoni

ROME/MILAN (Reuters) - Monte dei Paschi di Siena (BMPS.MI: Quote) said on Sunday it was seeking a financial investor as the political storm over a derivatives scandal at the ailing bank intensified ahead of next month's Italian election.

Italy's third-biggest lender, which needs state loans to stay afloat, this week revealed opaque derivatives trades, conducted between 2006 and 2009, that could cost it some 720 million euros.

The scandal has turned the spotlight on Monte Paschi's close political ties with the center left and on possible oversight failings by the Bank of Italy (BOI), then led by current European Central Bank chief Mario Draghi.

"I would like to have a long-term financial investor," Monte Paschi Chairman Alessandro Profumo told Italian business daily Il Sole 24 Ore on Sunday. "Nationality is not a problem. The important thing is that it believes in our project".

Profumo was appointed head of a new management team last year to try to turn around the world's oldest bank.

At the root of Monte Paschi's problems is the acquisition in 2007 of smaller rival Antonveneta for a massive 9 billion euros in cash, stretching its finances to the limit just months before the global financial crisis hit.

Siena prosecutors are investigating why the bank paid such an inflated price for Antonveneta shortly after Spain's Santander had purchased it from ABN Amro for just 6.6 bln euros.

After an all-day board meeting on Saturday, the Bank of Italy gave approval to Monte Paschi's request for 3.9 billion euros ($5.3 bln) of state loans, to be issued by end-February, though one leading politician said they should now be blocked.   Continued...

The main entrance to Monte Dei Paschi bank headquarters is pictured in Siena January 25, 2013. REUTERS/Stefano Rellandini