Monte Paschi Drops as Bank Considers Raising More Capital

Apr 15, 2014 4:10 am ET

April 15 (Bloomberg) -- Banca Monte dei Paschi di Siena SpA, the bailed out Italian bank, dropped the most in more than four months in Milan trading after indicating it may raise more capital than planned to repay state aid.

Monte dei Paschi, Italy’s third-largest bank, fell as much as 9.6 percent, the biggest intraday decline since Nov. 26. The stock was down 8.5 percent to 21.3 cents as of 9:52 a.m., giving the Siena-based lender a market value of 2.6 billion euros ($3.6 billion).

The bank is weighing whether to increase the size of a planned share sale to reimburse part of a 4.1 billion-euro government bailout before a European Union-imposed deadline of this year, “in light of the asset quality review parameters set by regulators and talks with the supervisory authority,” according to a statement today.

Chief Executive Officer Fabrizio Viola may increase the size of a 3 billion-euro share sale planned for as soon as May to 5 billion euros, Italian newspaper Il Sole 24 Ore reported earlier today.

“The stock is likely to suffer as a result, but investors’ appetite for Italy is currently strong,” Alberto Cordara, an analyst at Bank of America Merrill Lynch, wrote in a note today.