The Italian government is planning to sell troubled lender Monte dei Paschi di Siena (MPS) to private players after it completes restructuring steps, Reuters has reported.
Led by CEO Luigi Lovaglio, who joined MPS last month, the lender is conducting a review of the 2022-2026 strategic plan prepared earlier.
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Once the plan is ready, MPS would know the amount of capital it needs, Italian Economy Minister Daniele Franco told a parliamentary hearing.
As per the existing plan, the bank plans to raise €2.5bn ($2.8bn) to increase its capital base, Franco added.
Lovaglio is expected to finalise his strategy for MPS in June and raise capital in October, the news agency reported citing an internal memo.
“It is reasonable to expect that only after the capital increase and the restructuring steps envisaged in the new business plan, the best conditions will be there for the privatisation,” Franco noted.
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By GlobalDataLast year, the government was in talks with UniCredit for MPS’ divesture, but the deal failed to materialise.
The Italian government had bailed out MPS in 2017 and currently holds a 64% stake in the troubled lender.
As per European Union’s norms, the government had to privatise MPS by 2021-end, but it is now seeking an extension of the deadline.
“We think the Commission has no choice but to grant a reasonable extension … we did try to sell the bank,” the minister said.
MPS’ new plan will also consider the geopolitical turmoil caused by Russia’s invasion of Ukraine, which could impact its cash needs.
The bank’s direct exposure to Russia and Ukraine is very low but the impact of conflict on the overall Italian economy could also affect the bank.
