Italy sells 20% Monte dei Paschi stake to investors

ROME, Nov 20 (Reuters) – Italy’s Treasury said on Monday it had hired banks to place investors shares in Monte dei Paschi di Siena (MPS) (BMPS.MI) equivalent to around 20% of the bailed out lender’s capital.

Shares in MPS closed flat at 3.07 euros, valuing the bank at around 3.8 billion euros ($4.1 billion).

The current price is 50% higher than the 2 euros a share at which MPS completed a make-or-break capital raising a year ago.

Rome set a maximum discount of 6% for the share offering although the placement could close at a lower discount given strong demand, two sources familiar with the matter told Reuters.

The end of the transaction could be announced as early as Monday, one of the sources added.

Chief Executive Luigi Lovaglio used cash from a capital raise a year ago to fund thousands of staff exits, bolstering income through cost cuts.

With higher interest rates driving banks’ profits higher, MPS has forecast net profit would top 1.1 billion euros this year.

BofA Securities, Jefferies and UBS Europe are global coordinators for the accelerated bookbuilding, the Treasury said in a statement.

As part of the transaction, Rome committed not to sell any further stake on the market for a period of 90 days without the consent of the global coordinators, it added.

Commitments Italy agreed with European Union competition authorities at the time of the Tuscan bank’s 5.4 billion-euro bailout in 2017 bind Rome to eventually selling its 64% stake in the bank.

Reuters was first to report in May that the Treasury was open to reducing its stake via a share sale on the market, as long as any significant new investor managed the holding in line with the national interest.

Economy Minister Giancarlo Giorgetti and Prime Minister Giorgia Meloni have repeatedly said the government would try to boost competition among banks with the privatisation of MPS.

This raised the prospect of a potential deal with Banco BPM (BAMI.MI) or BPER Banca (EMII.MI), Italy’s third and fourth largest banks respectively, although both repeatedly said they are not interested in MPS.

Given the absence of interested buyers in the short term, the share placement emerged as the most likely option to reduce the state stake and work towards re-privatisation commitments, sources have previously told Reuters.

($1 = 0.9168 euro)

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