July 16, 2013 / 3:34 PM / in 5 years

Monte Paschi says no contact yet with potential investors

MILAN (Reuters) - Monte dei Paschi (BMPS.MI) has had no contacts with potential new investors yet, its chief executive said on Tuesday as Italy’s third-biggest lender moves to change ownership rules to lure new shareholders.

The entrance of Monte Dei Paschi bank headquarters is pictured in Siena January 24, 2013. REUTERS/Stefano Rellandini

A shareholder meeting later this week at the Siena-based bank, the world’s oldest, is set to scrap bylaws that say only its top investor - a charitable foundation with links to local politicians - can hold more than 4 percent in the lender.

The move comes ahead of a planned 1 billion euro capital increase expected to be launched next year and aimed at new investors to help pay back a 4.1 billion euro state bailout the lender was forced to take earlier this year.

Asked whether contacts were already under way with potential interested parties, the bank’s chief executive, Fabrizio Viola, told reporters: “There are no names, no ideas on the table at the moment.”

On Monday, the Monte dei Paschi foundation, which has a 33.5 percent stake in the lender, said it would vote in favor of the changes to ownership rules at Thursday’s shareholder meeting, meaning they are certain to pass.

By removing the stake limit, the bank will become potentially vulnerable to a takeover for the first time in its five-century-old history. The stock closed 1.4 percent higher at 0.22 euros on Tuesday.

Monte dei Paschi, founded in 1472, is at the centre of a high-profile investigation into risky derivative trades and was the only Italian bank to need state aid to plug a capital hole.

The bank’s management has said that the scrapping of ownership limits was requested by the European Commission as a condition for approving the bailout and was necessary to ensure the planned cash call would be successful.

Viola declined to comment on reports that the bank was looking to double the size of the capital increase to 2 billion euros.

“It’s too important a topic to make an assessment today. Let’s wait until the moment comes,” he said.

Until now, the 4 percent stake limit had helped the Monte dei Paschi foundation keep control of the bank and veto any unwanted decisions.

However, as the bank ran into trouble during the euro zone’s debt crisis, so did the foundation, which accumulated huge debts to fund two capital increases at the lender in 2008 and 2011.

Last year the cash-strapped foundation, which only two years ago owned more than 50 percent of the bank, began cutting down its holding to pay back creditors.

It still has a big enough stake to have a blocking minority at shareholder meetings, although it faces further dilution of its stake when the next capital increase is carried out.

Reporting by Elisa Anzolin and Silvia Aloisi; Editing by Pravin Char

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