Plan aims to raise €5 billion in fresh capital
Twice-bailed out Monte Paschi is on the ropes. Italian officials have been trying to convince the EU to allow a public bailout but the EU has been strident on bail-in rules.
The deadline for a deal surrounds Friday's stress test results or the open on Monday. The company is expected to fail and a bailout would hope to eliminate €10B in non-performing loans.
The FT reports that Renzi is desperate for a private deal in order to avoid a bail-in that would force the conversion of junior bonds into debt.
How likely does this sound?:
To boost its capital, Monte Paschi would launch a rights issue of up to €5bn, its third in three years and worth more than five times its current market value. However, analysts believe this fund raising would be difficult given the bank's reputation for scorching investors capital.
Analysts say Italian banks need at least €30B.
