Bloomberg News

Italy Said to Review Decree to Help Bank Recapitalization

June 26, 2012

Italy Said to Review Decree to Help Bank Recapitalization

Banca Monte dei Paschi di Siena SpA, which is among Italian lenders that must raise capital as part of Europe’s plan to end the sovereign-debt crisis, has a capital shortfall of 3.3 billion euros, according to the European Banking Authority. Photographer: Alessia Pierdomenico/Bloomberg

Italy may approve a decree to help banks to boost capital through the sale of bonds to the government, as Banca Monte dei Paschi di Siena SpA prepares to raise at least 1 billion euros ($1.3 billion) using the securities, two people familiar with the matter said.

Ministers may pass the measure as soon as today at a Cabinet meeting in Rome, said the people, who asked not be identified because the matter isn’t public yet. The legislation probably will be similar to the decree approved in 2009 that allowed lenders to issue so-called Tremonti-bonds, which were named after then Treasury Minister Giulio Tremonti, one of the people said.

Monte Paschi, which is among Italian lenders that must raise capital as part of Europe’s plan to end the sovereign-debt crisis, has a capital shortfall of 3.3 billion euros, according to the European Banking Authority. The bank must also repay 1.9 billion euros of state aid provided in 2009.

Monte Paschi’s board meets today to approve a plan that includes capital measures to comply with the European Banking Authority’s targets. The Siena, Italy-based bank may sell at least 1 billion euros ($1.3 billion) of bonds to the government as part of its plan, said a person yesterday. The bank may also restructure the old issue, said the person.

The lender has already covered more than 2 billion euros of the shortfall through the conversion of hybrid bonds and the implementation of new internal risk models, Chief Executive Officer Fabrizio Viola said last month.

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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