Italy’s Monte dei Paschi gets EUR5.4 billion bailout


One of the largest lender and the oldest bank in the world, Monte dei Paschi has finally received EUR5.4 billion bailout package from the European Commission.

In a statement, EU state aid regulators said Rome could inject €5.4 billion after Monte dei Paschi agreed to a drastic overhaul, including the transfer of bad loans to a special vehicle and a salary cap for senior managers.

The world’s oldest bank and Italy’s fourth biggest lender has been embroiled in a prolonged state rescue after failing to raise €5 billion on the market to shore up its capital.

The commission, which last month gave its preliminary approval to the bank’s state bailout, said the five-year restructuring would ensure the bank’s long-term viability.

As part of the overhaul, Monte Paschi will transfer €26.1 billion to a privately funded special vehicle on market terms, with the operation partially funded by Italian bank rescue fund Atlante II.

It will also change its business model to focus on retail customers, and small- and medium-sized companies.
Monte dei Paschi said it would be seeking a “precautionary recapitalisation” under EU state-aid rules late last year after its attempt to raise capital from private investors failed.