Monte Paschi Plan Envisages Profitability, Hundreds of Job Cuts

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Banca Monte dei Paschi di Siena SpA expects to get 2 billion euros ($2.4 billion) to shore up its balance sheet this year and forecast a return to profitability in 2022, part of a five-year plan the troubled Italian lender plans to submit to the country’s regulator.

The bank expects to report a loss of 562 million euros for this year and post net income of 41 million euros next year, rising to 559 million euros in 2025. More than 1,500 jobs will be eliminated, the bank said late Friday.

Assuming a “capital reinforcement” of 2 billion euros, it expects its fully loaded CET1 ratio -- a key measure of capital strength -- will rise to 13.8% at the end of the five years from 9.6% last year.

“The plan does not assume a radical transformation of the bank’s operating model and technological infrastructure that would involve significant investments, absorption of implementation capacity and high execution risks with benefits achievable only after a while,” according to a 64-page statement on Monte Paschi’s website.

The plan comes as the Italian government tries to dispose of its majority stake this year -- part of a deal it reached with European regulators at the time of a 2017 bailout for the lender. The Finance Ministry is pushing to sell the holding to UniCredit SpA, according to people with knowledge of the matter, while the bank is opening its books to other potential buyers as well.

Paschi has lurched from one crisis to another over the years. Plagued by soured loans and scandals to cover up huge losses, it was rescued from the brink of collapse most recently in 2017 but remains beset by potential legal claims totaling billions of euros. Successive governments have poured public funds into its coffers in an attempt to stop it from destabilizing the nation’s heavily indebted banking system.

©2021 Bloomberg L.P.

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