VIENNA (Reuters) - There is no need to drag out a decision on how to rescue Italian bank Monte dei Paschi di Siena (BMPS.MI), European Central Bank policymaker Ewald Nowotny said on Monday, confirming the ECB refused to give the bank more time to recapitalize.
Monte dei Paschi, Italy’s third-biggest lender, has said it will press ahead with a plan to raise 5 billion euros ($5.3 billion) on the market by year-end after the ECB’s refusal, which adds pressure on the Italian government to provide capital.
“There is a certain general feeling that it would not be good to delay things for too long,” Nowotny told a news conference in Vienna.
Italy prefers a market solution to save the bank, but should it fail, a state rescue would require a forced conversion of the bank’s bonds into shares, Treasury sources in Rome said on Monday.
Nowotny said that if the bank’s management did not succeed in putting together a capital increase in time, one would have to look at the legal options.
Asked if that meant a wind-down of the bank, he said any solution would have to be chosen carefully because the bank’s size meant it was systemically relevant.
“I would proceed with a certain caution ...and I think talks are going in that direction,” Nowotny told reporters, without elaborating.
Reporting by Francois Murphy; editing by John Stonestreet