Monte dei Paschi shares bounce 9% after rival BPM takes stake | USAEMALL.com

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Shares in Monte dei Paschi di Siena jumped 9 per cent in early trading on Thursday after the Italian government sold a 15 per cent stake in the bailed-out lender for €1.1bn, bringing in rival Banco BPM as a shareholder.

Milan-based BPM said it had bought a 5 per cent position in MPS after the market closed on Wednesday, as the government offloaded a majority of its remaining stake in the Tuscan lender that it bailed out in 2017.

MPS’ stock rose more than 9 per cent to €6.04 in early trading in Milan.

The sale reduces the Italian government’s stake in MPS, the world’s oldest bank, to 11.7 per cent from 26.7 per cent.

“We have completed an important action as we had announced in institutional venues by providing for the implementation of an Italian banking and financial policy operation aimed at strengthening the shareholder base,” said economy minister Giancarlo Giorgetti.

The government’s stake sale via an accelerated book build marks the latest step in a drawn-out restructuring process at MPS.

The Italian government held as much as 64 per cent of the bank’s shares as recently as last year, but has been reducing its ownership as part of an agreement with EU authorities to return the lender to private ownership.

Although BPM said it had no plans to request permission to exceed a 10 per cent holding in MPS, analysts at Keefe, Bruyette & Woods said the market was “likely to speculate that [BPM] could be interested in acquiring a controlling stake . . . in the future”. They added that “such a scenario could be favourable to both banks”.

BPM shares rose more than 4 per cent to €7.05 in early trading on Thursday.

Despite producing bumper profits and shareholder returns over the past two years, European lenders are under pressure to cut costs and find new revenue sources as interest rates fall. One option is to merge with rivals, which can produce cost savings and economies of scale.

The Italian government stepped in to rescue MPS in 2017 by handing over €5.4bn in exchange for a 70 per cent stake in the lender, marking Italy’s biggest bank nationalisation since the 1930s.

The Italian Treasury said on Wednesday it had placed the MPS shares at €5.792, a 5 per cent premium on Wednesday’s closing price.