Monte dei Paschi announces restructuring plans, shares jump

Banca Monte dei Paschi di Siena´s new chief, Marco Morelli, unveiled a broad revamp of the lender´s operations just six weeks into his new job in a bid to win over investors and secure its survival.

The world´s oldest bank said it would slash 2,600 posts by 2019, close 500 branches and sell some of its units and bad debt to refocus on the retail, small business and affluent channels.

“The relaunch of the commercial business is based on the acceleration of the digitalization process and an higher focus on the retail, small business and affluent channels,” Monet dei Paschi said.

That “will lead to a sustainable lower cost of risk.”

Monte dei Paschi di Siena´s goal was to boost its return on capital and attain annual profits of €978m in 2018 and €1.11bn in 2019.

It was now also looking to sell its Merchant Acquiring unit and the bad debt recovery platform.

Istituto Centrale delle Banche Popolari Italiane SpA had already offered to pick up the former for €520m.

In parallel, the restructuring plans called for the sale of €28bn in bad debt and tapping markets by the end of the year for €5bn in fresh equity.

The capital raising excercise might be undertaken in various tranches, the lender said in a separate statement, including via a partial debt-for-equity swap with a part reserved for so-called anchor investors.

Shareholders were scheduled to meet on 24 November to approve the capital increase, its third in two years.

As of 0801 BST shares in Monte dei Paschi di Siena´s were higher by 28.28% to €0.35.