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Monte dei Paschi set to reject rescue offer

Friday, July 29, 2016 - 01:25

Italian bank Monte dei Paschi is preparing to unveil a plan to address regulatory concerns over its financial stability. It's looking for ways to strengthen its balance sheet ahead of European banking stress test results, as Kirsty Basset reports.

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EU bank stress test results are soon out. And Italian lender Monte de Paschi is not expected to be a star performer. (SOUNDBITE) (English) PRESIDENT OF THE BANCA POPOLARE DI MILANO SUPERVISORY BOARD, NICOLA ROSSI, SAYING: "They're one of the, sort of pretty much at the bottom of the league table in terms of capital provisions." The tests are expected to show it doesn't have enough capital to withstand a downturn. And with 47 billion euros of non-performing loans, investors across Europe are afraid its frail finances could destabilise the region's banking system. But some believe the bank's problems are isolated. (SOUNDBITE) (English) PRESIDENT OF THE BANCA POPOLARE DI MILANO SUPERVISORY BOARD, NICOLA ROSSI, SAYING: "There might be one single problem in the Italian banking system and everybody is doing his lot in order to face it, tackle it and provide a solution. As far as the Italian banking system as a whole is concerned, I don't think there is a systemic problem and I think the stress tests that are on their way will quite clearly suggest that there is not a systemic problem in Italy," The race is on to sort a deal before the test results are released. Swiss bank UBS has made a last-minute rescue proposal - but the board is set to reject it, perhaps in favour of another offer. (SOUNDBITE) (English) FXPRO, HEAD OF RESEARCH, SIMON SMITH, SAYING: "When you're at this level, in terms of Monte de Paschi, there's very few options left." Shares in Monte dei Paschi, which have lost 75 percent so far this year, rose 7 percent in morning trade.

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Monte dei Paschi set to reject rescue offer

Friday, July 29, 2016 - 01:25