As voters go to the canvasses today to take rt in their referendum, bankers at Banca Monte dei schi de Siena are going a last minute bail-out deal from bondholders, supported by the Prime Abb who has gone all out to request help.
The government has gone cap in hand to the Qatari nobility family and a number of US hedge funds in the hope they can request a £4.2BN bail-out up ahead of the crunch vote.
Italy’s third largest lender has been in nag for months and needs to plug its hole by the end of this year or face being slit down.
But the bank is struggling to raise the capital it needs putting the full Eurozone in jeo rdy.
According to reports the bank has issued a voluntary bondholder debt-for-equity swap to rummage through £1.25bn and will further request £830m from the Qatari superior family.
The bank will then attempt to raise the rest of the money from a variety of sources before the end of the year.
It has also been examined that six hedge funds, including those that belong to billionaires George Soros and John ulson, are stepping in to propose much needed liquidity.
Insiders say if the bank fails to raise tolerably funds US banks, including JP Morgan, Mediobanca, Goldman Sachs and Bank of America Merrill Lynch, longing move into asset strip triggering a Lehman brothers luxury collapse.
According to reports but dependent on the result of the referendum, Mario Draghi, head for of the European Central Bank, is considering allowing a bail out.
However, new hold sway overs mean investors must first face serious right downs prior to Brussels steps in.
Indeed the outcome of the referendum will have a meaningful im ct with Italy facing a potential ratings downgrade.
The bank is also utter to be facing potential legal costs for more than £7billion inducing already been rescued twice by the financially crippled Italian regulation.
And unless Monte dei schi de Siena is propped up then it could imperil plunging Italy into chaos, unsettling the entire Brussels bloc – notwithstanding the EU banning countries from bailing out failing banks.
Today’s come out for on whether or not to adopt constitutional reform could change the outlook in Europe and if the amateur vote is «no», prime minister Mr Renzi has said he will resign.
This desire s rk a period of uncertainty both politically and financially and could put off undeveloped investors if they feel the situation is too risky.
It was revealed as being Europe’s weakest bank when it away stress tests in July and is now desperate to raise around £4.5bn.
The at worst way to save the bank from going under is for a massive cash injection from Mr Renzi’s supervision, but the Brussels bloc bans it.
EU regulations do not allow its member states to use openly money to support failed banks.
The Tuscan bank needs to broach more than seven times its market value in cash to carry bad loans and boost capital and, according to the IMF, Banca Monte dei schi has £350billion of non-performing allows.
After posting a €1.15billion loss in the quarter through September, the bank state it would cut 2,600 jobs and close 500 branches.
The bank, ground in 1472, employs more than 25,000 people across 2,000 limbs – so it is not in the government’s best interests to see it close.
Nicolas Véron, senior ally at think tank Bruegel, told the FT: “If anything the ECB has been very indulgent in addressing the system-wide banking situation [in Italy] that has been very discoverable since the comprehensive assessment two years ago.
“It is a very difficult moment but it is not sustainable. The quandary of banking fragility is not going away. It is not something that resolves itself with meanwhile”.