Monte dei Paschi likely to be rescued this week as Italy approves bank bailout
Shares in Banca Monte dei Paschi di Siena were well off earlier lows amid expectations the bank will be rescued by the end of the week, as it emerged that Italy has approved a government request to borrow up to €20bn to underwrite the country’s struggling banking sector.
A resolution in favour of the plan was approved in a 389-134 vote, with eight abstentions, in the lower Chamber of Deputies. The Senate also gave the green light in a 221-60 vote, with three abstentions.
The rescue fund is also likely to be used to shore up other troubled banks and to help guarantee liquidity in the banking system.
Earlier in the day, shares in Monte dei Paschi had been suspended following sharp falls after a report suggested it could run out of liquidity faster than previously expected.
According to Reuters, the €10.6bn net liquidity position of the world’s oldest bank is now likely to last only four months, versus a previous estimate of 11 months.
Meanwhile, on Tuesday, the bank was reported to have raised just €500m in a voluntary debt-to-equity offer, which is far below its €5bn target for the end of the year.
At 1138 GMT, the stock was down 5.4% to €17.53.