Italian lender Banca Monte dei Paschi di Siena (MPS) has announced that it plans to raise €2.5bn ($2.8bn) to increase its capital base.
The capital raise is part of the bank’s 2022-2026 business plan that will be submitted to European authorities for regulatory clearance.
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MPS stated that the proceeds will be used for investments, restructuring, and resolving the compliance issues that emerged during the stress test.
The plan also includes job cuts that will be managed through a voluntary exit scheme.
Notably, the Italian government bailed out the lender in 2017 and currently owns a 64% stake in the ailing bank.
As per European Union’s regulations, the government must divest its stake in the bank by the end of 2021.
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By GlobalDataMPS’ new plan revises the plan it had submitted earlier this year because the government is failing to comply with EU’s rules.
The government was in talks with UniCredit for the sale of MPS; however, the talks ended in October after they could not reach an agreement on capital injection in MPS and its businesses.
As per Reuters’ earlier report, the government is reportedly seeking an extension on the deadline from EU regulators.
Separately, last week, Italian mid-sized bank BPER’s offer to buy ailing bank Carige was rejected by the latter’s backers.
BPER demanded a $1.1bn capital injection in the lender, which was rescued by Italy’s depositor protection fund, the FITD in 2019.
