Italy Prime Minister (PM) Giuseppe Conte has approved the bad loan clean-up and the eventual sale of state-owned lender Banco Monte dei Paschi di Siena (BMPS), Reuters has reported.
Due to the pressure from co-ruling party 5-Star Movement, Conte delayed giving the go-ahead, while the Italy Treasury pushed for speedy approval.
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Rome bailed out BMPS by acquiring a 68% stake for €5.4bn ($6.34bn) back in 2017 when the bank was moving into bad debts following years of mismanagement.
According to the bailout terms agreed with the European Union (EU) competition authorities, this stake must be sold by the end of 2021 and re-privatise by mid-2022.
The Treasury says that the final deadline is two years apart, hence it is against negotiating an extension with the EU, Reuters said.
Earlier this month, the shareholders approved the decree to clean-up bad loans and accelerate the bank’s sale under a plan dubbed as the ‘Hydra’ scheme.
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By GlobalDataThe plan comprises the sale of bad debts worth €8.1bn ($9.37bn) to state-owned asset manager AMCO.
The plan is expected to reduce BMPS’ impaired loans to 4.3% of its total lending, from 40%.
The plan had secured the final approval from the European Central Bank (ECB) last month, however, the regulator has demanded the bank to shore up its capital.
Therefore, the Italy treasury, which has worked on the plan for two years, is hoping to find a buyer by the year-end to acquire the government stake in BMPS.
The Treasury has already approached Banco BPM and UniCredit as potential buyers for BMPS. However, the lenders were not interested in a deal.
