Monte dei Paschi’s CEO asks 2 billion worth of funds to prevent breaching the firm’s capital requirements

On Monday, Banca Monte dei Paschi di Siena’s (BMPS.MI) Chief Executive Officer Guido Bastianini announced that the Italian bank needs 1.5 to 2.0 billion Euros ($1.7 to $2.3 billion) in cash to prevent breaching the firm’s capital requirements in the first quarter of 2021.

In 2017, the commercial banking company received a rescue deal from the Italian government worth 5.4 billion Euros on a 68% stake. Monte dei Paschi reserved another 1.5 billion Euros to ease its re-privatization which must take place in the next two years.

“The deal presents more risks than opportunities as legal risks would increase, CET1 (capital) neutrality wouldn’t be met and even assuming significant cost synergies, the deal dilutes 2022-2023 earnings per share by around 20%,” Equita Group stated.

According to a reliable source, the bank was planning to transfer credit risks worth 2 billion Euros of performing loans to a third party to free up the firm’s capital income.