Some experts have been expecting that Europe’s top banks will have to raise tens of billions of new capital, while one academic paper estimated the shortfall at hundreds of billions of euros.
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Austria’s Raiffeisen, Spain’s Banco Popular and two of Ireland’s main banks also came out with the worst results in the European Banking Authority’s test of 51 EU lenders.
Update: Monte Paschi officials now say the European Central Bank has approved its plan.
Monte Paschi said it aims to complete the capital increase and sale of bad loans by the end of the year.
That rescue package would include the sale of €10 billion worth of non-performing loans (NPLs), which sit at the heart of the Italian banking crisis (which Credit Suisse thinks is a potential catalyst for the future collapse of the eurozone), along with a €5 billion capital raise.
Orcel was instrumental in the 2007 takeover of Dutch bank ABN Amro, a deal that eventually led Monte dei Paschi to buy fellow Italian lender Antonveneta, which had previously been a subsidiary of ABN.
Bankers and analysts have said it will be tough for the bank to find enough investors to take up all those new bonds as well as tip 5 billion euros into the bank in the form of equity.
ROME The economy minister on Friday welcomed a privately funded rescue of Italy’s third-largest lender, Monte dei Paschi di Siena (BMPS.MI), saying the bank could now develop an industrial plan to help the real economy.
In a surprise statement on Thursday night, Monte dei Paschi said it had received two letters from UBS and Corrado Passera, a one-time industry minister and the former CEO at Italy’s biggest retail bank Intesa Sanpaolo. Under European rules, this would entail politically unpalatable losses for Monte dei Paschi’s bondholders and depositors above 100,000 euros.
Three sources close to the matter said Monte dei Paschi was set to reject the proposal that was presented to the board by Passera in person.
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Renzi has staked his future on winning a referendum on political reform in the fall.
