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EXCLUSIVE-Monte Paschi eyes BPM merger as Italy's Treasury prepares exit- sources

Tue 30th June, 2020 4:58pm
* Italian Treasury drafts decree to prepare Monte Paschi
exit
    * Monte Paschi screens candidates for tie-up - sources
    * Banco BPM only large Italian bank not involved in merger
deals
    * BPM chief met MPS president in Milan on Tuesday - source 
    * BPM spokesman denies any deal with MPS

    By Giuseppe Fonte and Elisa Anzolin
    ROME/MILAN, June 30 (Reuters) - Banca Monte dei Paschi di
Siena  BMPS.MI  is exploring merger options, including with
Banco BPM  BAMI.MI , while Italy's Treasury Ministry has drafted
a decree to sell its controlling stake in the bailed-out bank,
two sources told Reuters.
    Rome owns 68% of the Tuscan bank following an 8-billion euro
($8.96 billion) rescue in 2017 and has promised the European
Commission it will re-privatise the bank next year.
    The Treasury has drafted a decree, which requires the
backing of Prime Minister Giuseppe Conte, authorising it "to
proceed with the extraordinary operations" to shed its Monte dei
Paschi stake.
    The draft decree, seen by Reuters, said the Treasury would
aim to sell its holdings "in one or more stages, through one or
more public offerings, reserved for Italian retail investors,
including Monte dei Paschi employees, as well as institutional
investors."
    It could also act "through direct negotiations or a merger
deal," the draft decree said.
    Banco BPM is the only one of Italy's top six banks not
currently involved in any potential deal, making it a candidate
for a tie-up with Monte dei Paschi.
    One of the sources said a potential merger between the two
banks was at the centre of talks on Tuesday between Banco BPM's
chief executive Giuseppe Castagna and Monte dei Paschi
chairwoman Patrizia Grieco.
    Castagna was seen by Reuters leaving the Monte dei Paschi
headquarters in Milan. He declined to answer when asked if he
had met Grieco.
    The Treasury was not available for comment. Monte dei Paschi
declined to comment. A spokesman for Banco BPM said the bank
"flatly denies any talks regarding a deal with MPS."
    A second source close to the matter said Monte dei Paschi
had begun screening possible interested parties for a merger,
but the Treasury was not yet looking at any specific scenario.
    Both sources asked not to be identified due to the
sensitivity of the matter.
    Monte dei Paschi on Monday unveiled a plan to offload more
than 8 billion euros in gross bad loans, a move that would
reduce its problem debts below 5% of total lending from
currently 12.4%.  urn:newsml:reuters.com:*:nL8N2E63N8
    The European Central Bank must clear the transaction which
involves shedding 1 billion euros in equity capital, something
that might be problematic, the first source said.
    UBI Banca had always been tipped the leading candidate to
take over Monte dei Paschi, but UBI has now become the takeover
target of Italy's second-biggest bank Intesa Sanpaolo  ISP.MI .
    A three-way merger scenario including also Banco BPM had
been explored in recent years though discussions led nowhere.
    Banco BPM presented a business plan at the outset of the
coronavirus pandemic which now must be revised because it
projected only a mild contraction in Italy's 2020 GDP, which is
now seen shrinking by more than 8%.
    
    ($1 = 0.8925 euros)

 (Reporting by Giuseppe Fonte and Elisa Anzolin, additional
reporting by Stefano Bernabei, Gianluca Semeraro and Andrea
Mandala, editing by Gavin Jones and Jane Merriman)
 ((giuseppe.fonte@thomsonreuters.com; +390685224393;))
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