Monte Paschi to raise up to 2.5 bln euros to cover 'stress test' hole

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Monte Paschi to raise up to 2.5 bln euros to cover 'stress test' hole

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Italy’s Monte dei Paschi bank is to sell a further 2.5 billion euros worth of shares next year to boost its capital reserves.

That would cover 2.1 billion euro capital shortfall revealed in the recent stress tests and enable it to pay back 1.1 billion in state aid.

The bank will decide on how much it will ask investors for after European authorities have approved its capital plan, which also includes asset sales and other measures for 220 million euros.

It would also clear the way for a takeover of Italy’s third biggest lender, perhaps by smaller domestic rival UBI Banca.

The Tuscan bank, which is the world’s oldest, has had a calamitous three years – losing 9.3 billion euros, selling assets, closing 500 branches and cutting 8,000 jobs.

Last week former top executives were convicted over opaque derivatives trades that were meant to hide the bank’s mounting losses.