November 14, 2024
Italy Sells New Paschi Stake as State Eyes Exit From Lender #ItalyFinance

Italy Sells New Paschi Stake as State Eyes Exit From Lender #ItalyFinance

CashNews.co

(Bloomberg) — Italy is selling a 7% stake in Monte dei Paschi di Siena SpA, the latest step in an exhaustive restructuring drive that dates back to 2017.

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The sale, through a placing, follows two other successful disposals that progressively cut the Finance Ministry’s stake in Paschi from the level of 64% late last year.

An initial 25% stake sale in November 2023 allowed Italy to raise about €920 million ($973 million), a notable win for Prime Minister Giorgia Meloni’s government, which has pledged to bring in about €20 billion from selling down Italy’s corporate holdings in a bid to slash debt.

The sale of an additional 12.5% in March brought in another €650 million.

Founded in 1472, Monte Paschi has recently undergone years of painful efforts to turn its business around. The bank was first bailed out in 2009 after it was hit by souring loans and derivatives deals that backfired.

Over the following decade it struggled to deliver consistent profit, and the bank was ultimately nationalized in 2017. A 2021 push by Italy’s previous government to combine the lender with UniCredit SpA fell through.

Finance Minister Giancarlo Giorgetti told Bloomberg last month that the state was ready to sell another stake before the end of this year, reiterating that Rome wants Paschi to be part of an overall consolidation move in the Italian banking sector.

The Italian media has also reported on a group of investors being put together by banker Enrico Marchi to purchase 10% of Paschi.

Under Chief Executive Officer Luigi Lovaglio, who took over in early 2022, Paschi has cut costs and shifted its focus to its most profitable businesses. Combined with a boost from higher interest rates, that allowed the bank to resume paying dividends last year.

Monte Paschi earlier this month posted better-than-expected results for the third quarter, driven by higher income from fees.

Banca Akros is acting as global coordinator and bookrunner in the accelerated bookbuilding.

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