Italy Still Wants to Sell Monte Paschi, But When Is Unclear

(Bloomberg) -- Italy is still planning to sell its majority stake in troubled bank Monte dei Paschi di Siena SpA. But how much time it will need, after talks with UniCredit SpA ended abruptly, is unclear, according to the official who led the negotiations. 

“The privatization of the bank will be a necessary point of arrival for Monte Paschi,” said Alessandro Rivera, director general of the Finance Ministry, who addressed lawmakers Tuesday. “The government has started talks with the European Union to get additional time, which at the moment cannot be quantified.”

Italy bailed out the world’s oldest bank in 2017, and had committed to sell its 64% stake by the end of 2021 to comply with a deadline set by European Union. Talks with Unicredit over the sale of the Tuscan lender collapsed at the end of last month after the two sides couldn’t agree on the size of a capital injection needed to re-capitalize the bank as part of the deal. 

Rivera said the Finance Ministry will take part in the bank’s capital increase while seeking other alternatives. The government “will continue to guarantee the bank will be efficiently managed and that it will have a solid capital base,” Rivera said.

While the Treasury’s goal remains to exit the bank, it is unlikely that another sale process can be finalized by June, he added. The Ministry is now focused on the bank’s business plan to present to authorities, Rivera said. Italy doesn’t expect an infringement procedure by the EU due to the delay in the sale.

Siena-based Monte Paschi has burned through about 18 billion euros ($20.9 billion) in investor and taxpayer cash since 2008, and was the worst performer in European stress tests earlier this year.

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