(Adds more details from statement)
MILAN Feb 9 Italian bank Monte dei Paschi di
Siena, which is being bailed out by the government,
booked a net loss of 3.38 billion euros ($3.60 billion) for 2016
after setting aside more money to cover for bad loans.
The bank, which ranked the worst in Europe in stress tests
last summer, said in a statement it had recorded 2.6 billion
euros in loan loss charges due to "an updated methodology and
evaluation" of its problematic loans.
It also booked one-off charges for 411 million euros.
The bank said CET 1 ratio, a key measure of financial
strength, stood at a lowly 8 percent at the end of December
after it failed to raise money from private investors to plug a
capital shortfall. The capital ratio stood at 11.5 percent at
Highlighting the funding challenges it faces, the bank said
direct funding had fallen by 14.7 billion euros at the end of
December from a year earlier to 105 billion euros.
This was due to the loss of commercial deposits for 28
billion euros "resulting from the outflows recorded in the
course of the year, largely as an effect of tensions ensuing the
negative results of the stress test and of the unsuccessful
The drop was partly offset by repurchase agreements with
"Preliminary data for the month of January sets funding at
the same level as the end of 2016, indicating a halt in these
outflows," the Tuscan lender said.
The Rome government is set to take a 70 percent stake in the
bank, pumping 6.6 billion euros to fill the bulk of an 8.8.
billion euros capital deficit. The rest of the money will come
from the forced conversion of subordinated bonds into shares.
But the state aid scheme still needs to be approved by the
European Commission, which must also give its green-light to the
bank's yet-to-be-presented restructuring plan. Sources say the
process is likely to take until May.
Meanwhile, Monte dei Paschi's shares, owned by around
150,000 people, have been suspended from trading until more
clarity emerges over the state rescue plan.
($1 = 0.9383 euros)
(Reporting by Silvia Aloisi; editing by Francesca Landini and