SIENA, Italy (Reuters) - Shareholders at scandal-hit Italian lender Monte dei Paschi (BMPS.MI) lifted ownership restrictions on Thursday in a bid to lure new investors and pay back state aid, potentially opening the way to a takeover of the world’s oldest bank.
A heated extraordinary shareholder meeting voted in favor of scrapping bylaws that said only Monte dei Paschi’s top investor - a charitable foundation with links to local politicians - could hold more than 4 percent of the lender.
The move comes ahead of a planned 1 billion euro ($1.3 billion) capital increase due to be launched next year and aimed at new investors to help reimburse a 4.1 billion euro state bailout the lender was forced to take earlier this year.
It also marks a watershed for Italy’s third biggest bank, known as “Daddy Monte” in its medieval hometown of Siena, ending five centuries of local control and political patronage and making it for the first time potentially vulnerable to a takeover.
Monte dei Paschi, founded in 1472, is at the centre of a high-profile investigation into risky derivative trades and has been the only Italian bank to need state aid to shore up its strained capital base.
The outcome of the vote was expected after the Monte dei Paschi foundation, which has a 33.5 percent stake in the lender, said earlier this week it would vote in favor of the ownership changes.
Chairman Alessandro Profumo, appointed last year to turn the bank’s fortunes around, said scrapping the ownership ceiling was needed to win approval for the bailout by the European Commission and ensure the planned cash will be successful.
He said only rebuilding the bank’s capital base could avoid nationalization, although he acknowledged finding new investors for a lender that has lost nearly 8 billion euros in the past two years would be no small feat.
“Unfortunately, there are no new shareholders on the horizon and it won’t be easy to find them. Italy is not the most attractive place to invest right now,” Profumo said.
He said he was confident the bank could remain independent, but small shareholders voice their fear that the bank, which is the biggest employer in Siena, could fall prey to unwanted suitors.
“At current market prices, with 1 billion euros you can buy 40 percent of the bank,” Romolo Semplici, head of a group of small shareholders, told Reuters.
“We feel management is giving potential bidders a chance to put a gun to our head in the future and do what they want, fire people and perhaps even move the bank away from Siena,” he said.
Another small shareholder shouted at Profumo: “You’re selling the bank away, and for peanuts!”
Until now, the 4 percent stake limit had helped the Monte dei Paschi foundation keep a tight grip on the bank.
But as the lender 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 bank 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 and is expected to sell more of it in coming months.
($1 = 0.7612 euros)
Reporting by Silvia Aloisi; Editing by Patrick Graham