Italy has no buyers for Monte dei Paschi, eyes small share sales instead of exit, sources say

MILAN, Sept 22 (Reuters) – Italy is unable to sell out of Monte dei Paschi di Siena (MPS) (BMPS.MI) in the near term because of a lack of interested buyers and may proceed instead by placing small blocks of shares on the market, two people close to the matter said on Friday.

Italy owns 64% of the Tuscan bank following a 2017 bailout, which the European Union cleared at the time on condition the state aid is temporary.

Reuters was first in May to report the Treasury was open to selling down its Monte dei Paschi (MPS) stake on the market if conditions were right.

The sources said that, since then, such an option had increasingly emerged as the only realistic solution to work towards re-privatisation commitments Rome took with the EU, given a dearth of buyers.

Though the Treasury is considering cutting its stake with share placements, it would retain majority ownership, one of the sources said.

A spokesperson for the ministry said no decision regarding MPS had yet been taken.

Following a failed attempt to sell to UniCredit (CRDI.MI) in late 2021, the Treasury hired Luigi Lovaglio to steer MPS through a risky capital raise which the veteran banker pulled off a year ago in tough market conditions.

Lovaglio has used the money to finance voluntary staff exits and boost profits through cost cuts, guiding for a net income of more than 1 billion euros this year.

UniCredit and Banco BPM (BAMI.MI) have both repeatedly denied any interest for MPS. Bankers said the capital raise has made any deal more expensive for any buyer, complicating the prospect for a merger.

Lovaglio has called in the past for consolidation among mid-sized lenders such as MPS but one of the sources said the government believed that, given more time, the bank’s top management could generate further value for MPS’ shareholders, which appeared preferable to rushing into a deal.

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