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 The world's oldest bank was forced to accept 4.1 billion euros of
state aid earlier this year after being hammered by the euro zone
debt crisis and loss-making derivatives trades.
The Tuscan bank needs a cash call to repay the state aid and avert
nationalization. Profumo and CEO Fabrizio Viola want to launch it in
January and have asked shareholders to approve this time framework
this week.
They have already secured a pool of banks ready to guarantee the
rights issue and would like to carry it out quickly to remove
uncertainty and avoid a string of cash calls by other European
lenders that might make fundraising harder.
But the biggest shareholder — a cash-strapped not-for-profit
foundation with close ties to politicians in Siena — is determined
to push back the cash call to mid-2104 to win more time to sell down
its 33.5 percent stake and repay debt.
A shareholder meeting due on Friday had to be reconvened for
Saturday as only 49.3 percent of investors showed up, below the
required 50 percent plus one legal threshold. This was mainly due to
small investors still enjoying the Christmas break.
On Saturday, the quorum will be lowered to one third of
shareholders, allowing the foundation to easily postpone the capital
increase.
A stone-faced Profumo left Friday's aborted meeting without making
comments.
Aides and bankers close to the situation said Profumo, a
strong-willed, internationally respected banker, could resign if the
foundation votes against his proposal for a January cash call on
Saturday as expected.
"He is very annoyed," said an aide.
The 56-year old former CEO of UniCredit <CRDI.MI>, who bought
Germany's Hypovereinsbank and Italy's Capitalia while at the helm,
left Italy's largest bank by assets in 2010 after clashing with core
shareholders, a group of baking foundations.
The millionaire banker, who chose to receive a token salary of
around 60,000 euros when he joined the beleaguered Monte dei Paschi
in April 2012, may decide to quit if the foundation publicly defies
him with what would essentially amount to a no-confidence vote,
insiders said.
Antonella Mansi, a feisty 39-year-old businesswoman recently
appointed head of the Monte dei Paschi foundation, said on Friday
she was serene. "See you tomorrow," she told reporters, knowing she
can count on a stake large enough to block any unwanted decision at
Saturday's meeting.
"It's important to carry out the capital increase as early as
possible," said Roberto Lottici, fund manager at Ifigest. "Monte dei
Paschi is being kept afloat by the state loans, but they are very
costly."
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STATE AID
The rights issue, along with a tough restructuring plan, is among
the conditions the European Commission imposed before giving its
green light to the state aid for Monte dei Paschi.
The size of the capital increase is higher than the lender's stock
market value of around 2 billion euros and the operation is regarded
as risky as the bank is still loss-making.
Monte dei Paschi shares rallied 4 percent in early trading, but
dropped after the shareholder meeting was rescheduled. The stock was
down 1.7 percent at 0.174 euros at 8:13 a.m. ET.
Siena mayor Bruno Valentini, whose city council is the top
stakeholder in the Monte dei Paschi foundation, said postponing the
cash call might help keep the bank in Italian hands.
"We cannot let the third biggest bank in this country fall prey to
foreign interests," he told reporters. "Monte dei Paschi is not just
an issue in Siena, it is a big national issue."
Saddled with around 340 million euros of debt, the foundation is
looking for a buyer for all or part of its stake. It fears that a
cash call next month would massively dilute its holding and leave it
with virtually nothing to sell.
Profumo said last week that a delay would bring uncertainty and
could force the bank to be nationalized.
Under the agreement with Brussels, if Monte dei Paschi cannot
complete the capital increase by the end of 2014 the Treasury would
convert the bonds it bought from the bank into shares, effectively
nationalizing the bank.
The bank, which is axing 8,000 jobs and shutting 550 branches, said
a delay in the cash call would add 120 million euros of costs from
interest payments on the state debt.
(Additional reporting by Danilo Masoni;
editing by Lisa Jucca and Peter Graff)
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