Monte Paschi toughens up revival plan to win over Brussels
By Lisa Jucca and Stefano Bernabei
MILAN/ROME (Reuters) - Bowing to European Union requests, loss-making Italian bank Banca Monte dei Paschi di Siena BMPS.MI unveiled thousands of new job cuts on Monday and asset sale plans in a bid to return to profit and stave off nationalisation.
Italy's third-largest lender by assets had received 4.1 billion euros ($5.57 billion) in special state loans earlier this year after the euro zone crisis and a derivatives scandal brought it to the brink of collapse.
But European Commission has said it would only give a green light to the state aid if the bank produced a new turnaround plan and agreed to a larger-than-planned 2.5 billion euro share sale, roughly equivalent to its market value.
In the new plan, the bank's second in 18 months, Monte dei Paschi said it would shed around an additional 3,400 jobs and target 440 million euros of cost cuts.
Chief Executive Officer Fabrizio Viola said the measures unveiled on Monday would help Monte dei Paschi to become a leaner commercial bank by reducing risks in its balance sheet.
"This business plan is solid because we do not start by zero," he said, referring to cost saving and other measures the new senior management has carried out since taking the helm of the crisis-hit bank in early 2012.
The world's oldest bank came close to collapse during the euro zone debt crisis. It is embroiled in a judicial investigation over its purchase of a rival in 2007 and loss-making trades in derivatives which it made after that deal.
Under the new turnaround plan, the Tuscan bank said it would aim to repay the state loans fully by 2017 and make a net profit of 900 million euros by that date. Continued...