It is all change at the top for struggling Italian bank Monte dei Paschi di Siena as it tries to avoid collapse, which would send shock waves through the country’s financial and political institutions.
New chief executive Marco Morelli has been brought in to implement an arduous emergency rescue plan.
To avoid being wound down, the world oldest surviving bank has to raise up to five billion euros in new investment money and sell 27.7 billion euros of bad loans.
Monte dei Paschi is Italy’s third largest lender and its troubles threaten to spill over on the rest of the country’s troubled banking system.
Unlike Spain and Ireland, Italy did not move to help its banks during the financial crisis and then a harsh recession saddled them with a collective 360 billion euros of debts that are unlikely to be paid back.
The government can’t help because of the introduction of new European rules on allowing bank bailouts.
Viola and Tononi out
Morelli, the former head of Bank of America Merrill Lynch in Italy, replaces Fabrizio Viola who was in charge as Monte dei Paschi burned through eight billion euros since 2012 from previous share sales.
The Tuscan bank’s chairman Massimo Tononi also tendered his resignation.
Viola and Tononi were the architects of the rescue plan but have bowed out on fears they would struggle to get support from investors for the new share sale.
Monte dei Paschi is worth just 670 million euros after its shares plunged 81 percent this year.
They did rise briefly on Thursday as Morelli took over, but the effect didn’t last and the shares were down 0.5 percent at the close of trading, worth just 22 euro cents each.