Monte Paschi raises 4.99 billion euros in rights issue

Fri Jun 27, 2014 4:15pm EDT
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By Lisa Jucca and Stefano Bernabei

MILAN (Reuters) - Italy's Banca Monte dei Paschi di Siena (BMPS.MI: Quote) said on Friday it had raised 4.99 billion euros ($6.81 billion) through a sale of new shares, allowing it to repay much of its state aid and increasing chances it could pass an EU review of bank assets.

Monte dei Paschi, Italy's No.3 bank by branches, is one of 15 Italian lenders targeted in a health check of euro zone lenders by the European Central Bank (ECB) before it takes over supervision of the sector in November.

Nine of the 15 lenders are planning to tap investors for a total of nearly 11 billion euros. They are taking advantage of renewed investor appetite for European assets, especially southern European assets, now fears of a euro zone break-up have been dispelled, bankers involved in the capital increases said.

In a statement, Monte Paschi said the highly-dilutive rights issue was 99.85 percent subscribed, adding that unsubscribed rights will be offered on the market on July 1-7.

"It's a positive result for the bank and the government," Chief Executive Fabrizio Viola said in the statement.

The Tuscan bank was bailed out by the Italian state after being hit hard by the euro zone debt crisis and by a scandal over loss-making derivative trades, and had to request 4.1 billion euros in state aid last year.

It said it would use proceeds from the capital increase to pay back around 3.5 billion euros of state aid, including interests and share premium.

Bankers say they expect a combination of long-term investors such as pension funds and more volatile investors such as hedge funds to be among the subscribers of the bank's share issue.   Continued...

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