Italy sets aside more money to boost capital at Monte dei Paschi – sources

div classBodysc17zpet90 cdBBJodivpBy Giuseppe Fontep

pROME Reuters – Italy is beefing up a 1.5billioneuro 1.6 billion money pot destined for stateowned bank Monte dei Paschi di Siena MPS, three sources close to the matter said, adding it was still unclear by how much it would increase it.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe sources said that MPS would get part of 925 million euros in additional funds Italy set aside this week for capital injections into statecontrolled companies.p

pMPS declined to comment.p

pThe bank has previously said it needs 2.5 billion euros in capital but the actual size of its capital shortfall will be set only after new Chief Executive Luigi Lovaglio readies a new business plan in June.p

pMPS warned in its 2021 financial report that the cash call size may need to be revisited in light of the Ukraine crisis.p

pThe Italian state owns 64 of MPS following a 2017 bailout, which means it would provide around 1.6 billion euros if MPS raised 2.5 billion euros in capital.p

pThe fact that part of the new funds are destined for the Tuscan bank may indicate that the capital needs could be higher than the flagged 2.5 billion euros. However, one of the sources said it was too early to have a final figure.p

pThe capital increase will determine which portion of the funds will go to MPS, the source added.p

pBack in October, when the Treasury failed to clinch a sale of MPS to healthier rival UniCredit, a source close to the sale had told Reuters the cash raising could reach 3.5 billion euros.p

pHowever, since then the Treasury has replaced the MPS CEO, putting veteran UniCredit banker Lovaglio at the helm.p

pLovaglio is reviewing MPS accounts as he prepares a new restructuring plan. The cash call is slated for the autumn.p

pThe 925millioneuro funds are part of a broader stimulus decree approved by Prime Minister Mario Draghis government on Monday.p

pThe decree, not yet published but seen by Reuters, says the government can use the funds by the end of this year to strengthen companies subject to state control, without giving detail.p

pPart of the funds are also likely to be injected into unlisted statecontrolled firms including Eutalia, which helps the Treasury plan investment programmes under the European Unions Recovery Fund, the sources added.p

p1 0.9476 eurosp

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pp Additional reporting by Valentina Za in Milan Editing by Emelia SitholeMatarisep

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