Sources at the Italian premier's
office said Friday a government decree on banks is ready to be
put through if necessary, and that no cabinet meeting is
scheduled on Monte dei Paschi di Siena (MPS) bank tomorrow.
The decree reportedly contains references to generic "tools"
for intervention, but sources say the resigning government of
outgoing Premier Matteo Renzi is contemplating a two-pronged
approach to the MPS debacle, with the State as ultimate
guarantor for the ailing Tuscan bank's capital increase in case
a market operation should fail to raise the five billion euros
the lender needs to recapitalize.
The European Central Bank (ECB) has rejected MPS's request
for a 20-day extension on its recapitalization deadline, to
January 20.
Under new EU rules, public intervention can only take place
after shareholders take a hit. The government might buy back MPS
convertible subordinated bonds held by families and individual
shareholders in a bid to reduce the impact of a bail-in on small
investors, the sources said.
Shares in MPS closed -10.55% at 19.50 euros a share in
trading Friday. In spite of repeated suspensions on excess
volatility, 2.25 million shares equal to 7.7% of capital changed
hands as shares in MPS plunged as much as 16% in afternoon
trading.
The troubled Tuscan lender, Italy's oldest and third-biggest
bank, is undergoing a rescue operation after coming last in ECB
stress tests. It had asked for 20 more days because of Italy's
government crisis.
The rejection of MPS's request reportedly rules out the
'market solution' investment managers JP Morgan and Mediobanca
had been working on.
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