Banca Monte dei Pasch needs massive capital hike

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Banca Monte dei Pasch needs massive capital hike

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Italy’s Banca Monte dei Paschi di Siena has said it is going to need another 2.5 billion euros in fresh capital from investors to shore up its finances.

That is more than double the amount in its original rescue plan and matches the current market capitalisation of the bank.

The additional money is necessary to meet restructuring conditions imposed by the European Commission over the 4.1 billion euro state bailout it received this year.

Some analysts believe Monte Paschi probably will not be able to raise that much from investors.

If it can’t then the bank – which is the world’s oldest and Italy’s third biggest – would likely have to be taken over by the state.

“There’s no chance on the planet that they can raise 2.5 billion euros on the market within 12 months. They are heading towards nationalisation,” said Giuseppe Bivona, a former Goldman Sachs and Morgan Stanley investment banker who has been advising consumer group Codacons in a series of lawsuits against Monte Paschi.