Monte dei Paschi making final effort to woo retail investors

Beleaguered Italian bank Monte dei Paschi di Siena was doing its level best on Friday to convince 40,000 retail investors of their rescue plan.

The last-ditch bid for viability would see those investors convert their bonds into shares, with the bank warning them they could face bigger losses if they don’t.

Italy’s number three bank was facing a looming deadline of 31 December to raise €5bn in equity, without which it could be wound down - an event that could kick-start a much more painful banking crisis in the country.

The Italian government had confirmed it would step in with cash to bail out the bank as a last resort, but that would see all investors - retail and institutional - sharing in the losses.

Regulators at Consob had given the bank approval to extend the voluntary debt-to-equity offer to retail investors, who own junior debt totalling €2.1bn, from 16 to 21 December.

Monte dei Paschi also warned investors that, should Rome truck in state cash, they may still be forced to convert their bonds but at worse conditions than those being offered now.