Monte Paschi shareholders delay cash call, top executives may quit

Sat Dec 28, 2013 12:58pm EST
 
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By Silvia Aloisi

SIENA, Italy (Reuters) - Italy's third-biggest bank Monte dei Paschi di Siena was forced to delay a vital 3 billion euro ($4.1 billion) share sale to raise capital until mid-2014 because of shareholder opposition, plunging its turnaround plan into uncertainty.

The bank's chairman and its chief executive may now resign after their plan to launch the cash call in January was defeated at an extraordinary shareholder meeting on Saturday due to the vote of Monte Paschi's top shareholder.

The world's oldest bank needs to tap investors for cash to pay back 4.1 billion euros in state aid it received earlier this year and avert nationalization after being hammered by the euro zone debt crisis and loss-making derivatives trades.

The unprecedented clash between the lender's executives and its main shareholder - a charitable banking foundation with close links to Siena politicians - casts a pall over a tough restructuring meant to revive its fortunes.

Chairman Alessandro Profumo, a strong-willed and internationally respected banker who was formerly the chief of UniCredit, said he and CEO Fabrizio Viola would decide in January whether to step down.

"These are decisions one takes in cold blood and in the right place," Profumo said at the meeting.

"What I have on my mind is a 3 billion euro cash call because we need to pay back 4 billion euros to taxpayers. Today this is uncertain and at risk," he told a press conference.

Viola, sitting at his side, told reporters he would do everything "so that the ship does not sink", but that he could not take responsibility for mistakes made by others.   Continued...

 
People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. REUTERS/Max Rossi