UPDATE 1-Monte dei Paschi scrambles to ready bailout plan by Friday

giovedì 28 luglio 2016 20:18

(Adds details of bailout plan from sources)

By Pamela Barbaglia and Francesca Landini

LONDON/MILAN, July 28 (Reuters) - Italy's Monte dei Paschi di Siena,, which is scrambling to put together a privately backed bailout, suffered a setback on Thursday when three banks turned down a request to back a planned 5 billion euro ($5.5 bln) cash call.

The troubled lender is trying to pull together a banking consortium to guarantee its proposed capital increase in the next 24 hours so it has a plan in place by the time the results of European bank stress tests are released on Friday evening.

Banking sources say the tests will show the bank has insufficient capital to withstand an economic downturn and Monte dei Paschi is racing against the clock to ease regulatory concerns over its stability.

A source familiar with the matter told Reuters on Thursday Morgan Stanley and Italian lenders UniCredit and Intesa SanPaolo had rebuffed Monte dei Paschi's request to join the consortium, which is expected to underwrite in full the 5 billion euro cash call.

However, the Tuscan bank has so far received interest from Citigroup, Bank of America, Deutsche Bank and Credit Suisse, the source said.

The consortium will also include Mediobanca and JPMorgan who are acting as global coordinators for the capital hike, the source said.

Other banks including Societe Generale, UBS and Nomura are currently being contacted in a bid to share the cost of the proposed transaction, which is said to involve Monte dei Paschi issuing stock at between 0.5 and 0.6 percent of its tangible book value, the source said.   Continua...