LISBON, June 7 (Reuters) - Portugal's leading charity Santa Casa de Misericordia de Lisboa (SCML) is considering whether to take a stake in struggling small bank Caixa Economica Montepio Geral and has hired advisers to assess the risks, its CEO said.
Montepio shares soared last week on expectations that SCML was about to buy into the loss-making bank, which has been hit by bad loans as a result of the country's debt crisis.
However, Pedro Santana Lopes told SIC television that nothing has been decided yet even though the government had indeed suggested that "social economy" entities like SCML, which is also a lottery operator, buy into Montepio and reinforce its capital.
Santana Lopes said the government's aim was not to rescue Montepio, but to reorganise the way charities work with the financial sector, giving them a say in a private-sector bank, adding that there was no need for any hurried decision.
"We will only enter if the risk has been well measured ... SCML is studying the (Montepio) file as the authorities have requested, but we are a private entity and ... if the risk is considered inequitable, SCML will not enter," he said.
"We have started the process, hiring financial and legal consultants, auditors, and they will do this work for us, which we will study and decide."
He said that the Montepio Mutual Association, which owns the bank and is in the process of changing its statute to allow new shareholders, has offered to sell a stake of around 10 percent.
Montepio's shares rallied as much as 77 percent in the last two days of May but have since pulled back. They were down 4.3 percent on Wednesday, but were still 10 percent higher than before the rally. (Reporting By Sergio Goncales, writing by Andrei Khalip, editing by Axel Bugge and Susan Fenton)