Monte Paschi risks nationalization if share issue delayed: chairman

Tue Dec 17, 2013 1:12pm EST
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By Alberto Sisto

ROME (Reuters) - A delay past January in a 3 billion euro ($4.1 billion) share issue by troubled Italian lender Monte dei Paschi di Siena (BMPS.MI: Quote) would cause great uncertainty and could force the bank to be nationalized, its chairman said on Tuesday.

"As of today, we are sure of being able to do it," Alessandro Profumo said, adding that if the issue does not go through "we enter a zone of great uncertainty."

"It could be that if we are unable to do it, the bank would then be nationalized," he said in an interview to be broadcast on Italian state television later on Tuesday and witnessed by reporters.

Italy's third-biggest bank and its top investor have clashed over the timing of the issue, with the board voting against a proposal from Fondazione Monte dei Paschi di Siena to delay it at least until May from January.

A shareholder meeting has been called for December 27 to vote on both proposals, but the foundation - a not-for-profit body with close ties to local politicians in Siena - has a big enough holding in the bank to veto any unwanted decisions.

The share issue is part of a tough restructuring plan demanded by the European Commission for approving a 4.1 billion euro state bailout the bank received earlier this year.

Profumo and Chief Executive Fabrizio Viola want to carry out the rights issue as soon as possible, and have secured a pool of banks to guarantee it - but only if it is launched by the end of January.

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A man walks on a logo of the Monte Dei Paschi Di Siena bank in Rome September 24, 2013. REUTERS/Alessandro Bianchi