Management at troubled Italian
bank Monte dei Paschi di Siena (MPS) are considering boosting a
capital increase plan to five billion euros from a previous
planned increase of three billion euros, sources said Tuesday.
MPS confirmed that a capital increase beyond the initial
plan is under consideration and media reports said the maximum
could reach five billion euros.
Shares in the world's oldest operating bank fell by more
than 9% during trading on the Milan stock exchange Tuesday amid
the rumoured capital increase, which reports say is needed to
repay a government bailout of 4.1 billion euros made in late
2012.
Failure to repay that loan could see MPS nationalized, the
bank's chairman warned last December.
Any capital increase would need to be approved by
shareholders in MPS, Italy's third largest bank.
MPS recapitalized in 2012 and again in January 2013, when
news circulated that top management had entered into secret
derivatives contracts with Deutsche Bank and Nomura in order to
hide estimated losses of between 500 million euros and 750
million euros in two of its divisions.
MPS has also been at the center of a judicial investigation
into its acquisition of smaller rival Antonveneta in 2008 as
well as the derivatives trades the bank allegedly used to
conceal losses.
Former chairman Giuseppe Mussari and former director
general Antonio Vigni, who left in early 2012, are both under
investigation on allegations of market manipulation, false
statements to the market and regulatory obstruction in relation
to the Antonveneta deal and the derivatives trades.
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