Monday 22 January 2018

Assets of Italian bank are hived off

A view of a Monte Dei Paschi di Siena bank branch in Milan (AP)
A view of a Monte Dei Paschi di Siena bank branch in Milan (AP)

Massimo Gaia

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.



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