CERNOBBIO, Italy - Monte dei Paschi di Siena is likely to launch its up to 2.5 billion euros ($2.4 billion) rights issue on Oct. 10 provided the state-owned bank has secured support from cornerstone investors by then, two people close to the matter said on Friday.
Difficult markets amid the Ukraine war and Europe's energy crisis make it necessary for Monte dei Paschi (MPS) to find beforehand investors willing to back a sale that will price its new shares at more expensive multiples than stronger peers such as UniCredit.
After trying to push through the capital raise without involving MPS's commercial partners, Chief Executive Luigi Lovaglio is preparing to engage in discussions next week with asset manager Anima and insurer AXA, sources have said.
Anima and Axa distribute their products through MPS's branch network and have both signalled their readiness to help the Tuscan bank raise funds in the context of a strengthening of their partnerships.
Lovaglio had sought alternative solutions because stronger commercial ties over fee-yielding businesses like insurance and asset management diminish MPS's appeal as a merger partner.
After the capital strengthening MPS is expected to seek a merger to allow the state to cut the 64% stake it acquired after the 2017 bailout.
However, the eight banks that have signed a preliminary commitment to mop up unsold shares consider the involvement of cornerstone investors a necessity given markets' risk aversion at the current juncture, sources have said.
The eight banks can pull out if the deal is unlikely to succeed thanks to a clause making the underwriting contract subject to positive investor feedback.
Lovaglio, a respected former UniCredit executive, travelled to London this week to meet investors, but MPS' market value of just 300 million euros limits the discount the bank can offer on the new shares to a fraction of what a rights issue would normally entail.
($1 = 1.0269 euros)
