Monte Paschi scraps stake limit to lure investors

Thu Jul 18, 2013 8:57am EDT
 
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By Silvia Aloisi

SIENA, Italy (Reuters) - Shareholders at scandal-hit Italian lender Monte dei Paschi (BMPS.MI: Quote) lifted ownership restrictions on Thursday in a bid to lure new investors and pay back state aid, potentially opening the way to a takeover of the world's oldest bank.

A heated extraordinary shareholder meeting voted in favor of scrapping bylaws that said only Monte dei Paschi's top investor - a charitable foundation with links to local politicians - could hold more than 4 percent of the lender.

The move comes ahead of a planned 1 billion euro ($1.3 billion) capital increase due to be launched next year and aimed at new investors to help reimburse a 4.1 billion euro state bailout the lender was forced to take earlier this year.

It also marks a watershed for Italy's third biggest bank, known as "Daddy Monte" in its medieval hometown of Siena, ending five centuries of local control and political patronage and making it for the first time potentially vulnerable to a takeover.

Monte dei Paschi, founded in 1472, is at the centre of a high-profile investigation into risky derivative trades and has been the only Italian bank to need state aid to shore up its strained capital base.

The outcome of the vote was expected after the Monte dei Paschi foundation, which has a 33.5 percent stake in the lender, said earlier this week it would vote in favor of the ownership changes.

Chairman Alessandro Profumo, appointed last year to turn the bank's fortunes around, said scrapping the ownership ceiling was needed to win approval for the bailout by the European Commission and ensure the planned cash will be successful.

He said only rebuilding the bank's capital base could avoid nationalization, although he acknowledged finding new investors for a lender that has lost nearly 8 billion euros in the past two years would be no small feat.   Continued...