Assets of Italian bank are hived off
Europe's oldest bank, Monte dei Paschi di Siena, is close to reaching a final deal with an Italian bank bailout fund for the sale of its bad loan portfolio, a key plank of its rescue plan, three sources close to the matter said on Tuesday.
One of the sources said the deal envisaged the sale of €26bn of bad loans repackaged as securities at an average price of 21pc of their gross book value - for a total of around €5.5bn.
Under the deal, the Atlante 2 fund - which is financed by mostly private Italian financial institutions - will buy the riskier mezzanine and junior tranches for around €1.8bn, the source said.
A senior tranche of just over €3bn will be sold to institutional investors using a state guarantee, while around €500m will stay with the bank, the same source said.
"Most of the work has been done but there are still a few details to be ironed out," a second source said.
The deal is the latest step in a long-running process to rescue the bank, and comes after Italy began winding up two failed regional banks on Sunday in a deal that could cost the state up to €17bn.