Italy Lays Out Options for Exiting Paschi Bank Stake

(Bloomberg) -- Italy set out options for disposing of its majority stake in Banca Monte dei Paschi di Siena SpA, including a public tender or a merger with peers, as the state seeks to exit the lender by the end of next year.

Finance Minister Roberto Gualtieri has signed off on a draft decree to authorize the Treasury to sell its holdings in the rescued bank, people with knowledge of the matter said. The document, seen by Bloomberg, also says a disposal may be carried out in multiple stages. A tender may involve depositors, bank employees and institutional investors, according to the draft.

Monte Paschi, founded in 1472, is 68% owned by the Italian state after a recapitalization in 2017. The government can begin a sale or merger process after the bank completes a complex transaction that would allow it to move more than 8 billion euros ($9.4 billion) of soured debt to state-owned asset manager Amco, according to the document.

The Finance Minister’s office declined to comment.

The draft is still under review by Prime Minister Giuseppe Conte and could be amended further before it receives approval from the cabinet.

Undermined by souring loans and derivatives deals that backfired, the bank received a 5.4 billion-euro bailout from the government. Since then, it has struggled to deliver consistent profits given limited room for maneuver under terms demanded by the European Union in return for supporting the aid plan. The state’s stake is worth about 1.1 billion euros at the current share price.

As part of the bailout accord with the European Commission, Italy agreed to exit the bank by the end of next year. Italian government officials including Gualtieri have recently said they expect to meet that deadline.

Reuters previously reported that the finance minister approved the draft.

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