EU: Brussels and Rome seal rescue deal for Monte dei Paschi

The European Commission and Italy have reached a preliminary agreement on a state bailout for Monte dei Paschi di Siena that includes heavy cost cuts, losses for some investors and a cap on pay for the bank’s top executives.

The deal brings close to an end months of negotiations over the fate of the world’s oldest bank and Italy’s fourth biggest lender, the worst performer in European stress tests last year.

The Commission said it had agreed in principle on a restructuring plan for the bank so that it can be bailed out by the state under new European rules for dealing with bank crises.

“It would allow Italy to inject capital into MPS as a precaution, in line with EU rules, whilst limiting the burden on Italian taxpayers,” Competition Commissioner Margrethe Vestager said in a statement.

The bank would undergo deep restructuring to ensure its viability, including by cleaning its balance sheet of non-performing loans, she said.

Burdened by a bad loan pile and a mismanagement scandal, Monte dei Paschi has been for years at the forefront of Italy’s slow-brewing banking crisis.

The Commission said it had agreed in principle on a restructuring plan for the bank so that it can be bailed out by the state under new European rules for dealing with bank crises.

“It would allow Italy to inject capital into MPS as a precaution, in line with EU rules, whilst limiting the burden on Italian taxpayers,” Competition Commissioner Margrethe Vestager said in a statement.

The bank would undergo deep restructuring to ensure its viability, including by cleaning its balance sheet of non-performing loans, she said.

Full Content: New York Times

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