Monte dei Paschi's last-ditch rescue plan faces high hurdles

domenica 31 luglio 2016 18:27
 

* Bank unveiled emergency bailout to avert risk of collapse

* Tuscan lender fared worst in European stress tests

* Plan includes 5 bln euro cash call, huge bad loan sale

* Crisis threatens Italian banking system, regional contagion

By Silvia Aloisi and Valentina Za

MILAN, July 31 (Reuters) - With the ink barely dry on its bailout plan, Italian bank Monte dei Paschi di Siena faces a Herculean task convincing investors to back a third recapitalisation in as many years and avert a banking crisis that would send shockwaves across Europe.

To stave off the risk of being wound down, the world's oldest bank hastily unveiled the private sector-backed rescue blueprint late on Friday. It came just hours before the lender emerged as the worst performer in European stress tests that showed its capital would be entirely wiped out in a severe economic downturn.

The plan aims to clean up and bolster the bank's balance sheet once and for all, restoring to health a lender whose frailty threatens the wider Italian banking system, the savings of thousands of retail investors and the increasingly weak political standing of Prime Minister Matteo Renzi.

A financial crisis in the euro zone's third-biggest economy would also risk creating contagion across Europe, a region already reeling from Britain's decision to leave the EU.   Continua...