Troubled Italian bank Monte dei Paschi di Siena (BMPS.MI) will offer new shares for sale between Monday and Thursday in a last ditch attempt to raise 5 billion euros ($5.2 billion) by the end of the year and avoid a state bailout.
The European Central Bank has told Italy’s third-largest bank to raise capital this year and offload 28 billion euros in bad loans but finding investors has proved difficult amid political turmoil and this month’s change of government.
Monte dei Paschi said on Sunday its share offer for institutional investors, which accounts for 65 percent of the total, would run until 1300 GMT on Thursday.
The offer aimed at current shareholders and retail investors will end at 1300 GMT on Wednesday.
Monte dei Paschi said in a document on its website that, if successful, the share issue could raise up to 3.2 billion euros.
The rest of the capital needed would come from a voluntary debt-to-equity conversion offer on the bank’s junior debt which has already raised around 1 billion euros.
On Friday, the bank said it was reopening the conversion offer until Wednesday and extending it to retail investors owning 2.1 billion euros of its junior debt.
Italy is ready to step in to rescue the country’s third-largest bank should the fundraising plan fail.
Under new rules Europe introduced in the wake of the financial crisis to shield taxpayers, investors in a failing lender must bear losses before public money can be tapped.
A source familiar with the matter on Friday said Italy’s government would inject capital into Monte dei Paschi only after the forced conversion of 4.1 billion euros worth of subordinated bonds into shares.
The bank said in the offer document that its liquidity of 11 billion euros as of Dec. 14 could run out in the following 12 months due in part to its main depositor taking around 2 billion euros out of its current account.
($1 = 0.9574 euros)