Monte dei Paschi says ECB asking for 14.3 percent core capital level

Fri Jan 9, 2015 8:41am EST
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By Silvia Aloisi and Stefano Bernabei

MILAN/ROME (Reuters) - The European Central Bank (ECB) has asked Monte dei Paschi di Siena (BMPS.MI: Quote) to raise its core capital level to 14.3 percent as it sets new, tougher requirements for riskier lenders to bolster their financial strength.

The Tuscan lender, which emerged as the weakest bank in a Europe-wide health check of the sector last year, said the ECB request was preliminary and subject to changes, adding it was reviewing the proposal and would reply on Jan. 16.

Its shares were down 4.4 percent by 1205 GMT.

The ECB's 14.3 percent Common Equity Tier 1 or core capital requirement compares with a level of 12.8 percent the bank had at the end of September 2014.

Monte dei Paschi's statement came after Il Sole 24 Ore daily said the ECB had decided to assign specific capital requirements to individual banks which in the case of most Italian lenders will be much higher than those set by Basel III rules.

Italy's bank sector fared the worst in the ECB's assessment, laying bare the extent of the economic crisis in the euro zone's third biggest economy. Nine Italian lenders failed the tests although only Monte dei Paschi and Carige (CRGI.MI: Quote) still have a capital shortfall to fill.

The two banks have already announced plans for a 2.5 billion euro and a 700 million euro capital increase respectively.

The ECB sent letters to the banks it directly supervises where it outlined concerns and potential consequences based on the results of the assessment in October, banking sources said, but not all have been told to raise their capital levels.   Continued...

A panel with logo of Monte dei Paschi di Siena bank is seen in downtown Siena, November 5, 2014.  REUTERS/Giampiero Sposito