June 27, 2017 / 3:48 PM / a month ago

Monte Paschi close to striking deal over bad loan sale-sources

2 Min Read

MILAN, June 27 (Reuters) - Monte dei Paschi di Siena is close to reaching a final deal with an Italian bank bailout fund for the sale of its bad loan portfolio, a key plank of its rescue plan, three sources close to the matter said on Tuesday.

One of the sources said the deal envisaged the sale of 26 billion euros ($29 billion) of bad loans repackaged as securities at an average price of 21 percent of their gross book value - for a total of around 5.5 billion euros.

Under the deal, the Atlante 2 fund - which is financed by mostly private Italian financial institutions - will buy the mezzanine and junior tranches for around 1.8 billion euros, the source said.

A senior tranche of just over 3 billion euros will be sold to institutional investors using a state guarantee, while around 500 million euros will stay with the bank, the same source said.

"Most of the work has been done but there are still a few details to be ironed out," a second source said.

The deal is the latest step in a long-running process to stage a state rescue of the world's oldest bank, including efforts to enable it to shed its bad loans.

$1 = 0.8854 euros Reporting by Massimo Gaia, writing by Silvia Aloisi

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