Monte dei Paschi set to launch share sale

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The bank needs to raise about €5 billion ($ 5.23 billion) in fresh capital by the end of the year to stay afloat. If it fails to do so, the Italian government will step in and bail out the bank, according to a Treasury official.

Monte dei Paschi said on December 18 that it would reserve 65% of the new shares being sold for institutional investors and that the offer will be open until 13:00 GMT on December 22.

The rest of the shares being sold are reserved for existing shareholders and retail investors. That sale will run until 13:00 GMT on December 21.

It gave a €1 to €24.9 price range for the share sale.

Alongside the capital raising, the bank has reopened a debt-for-equity swap offer, asking investors to convert the junior bonds they own into shares.

In a previous swap offer the bank ran in recent weeks, junior bondholders agreed to convert only €1 billion worth of bonds, out of the more than €4 billion in circulation.

The bank needs to raise fresh capital as part of a major clean up of its balance sheet that the lender agreed with the European Central Bank.

The Italian government has been readying a rescue plan, should the bank fail to raise the funds it needs from private investors.

According to people familiar with the matter, it could step in and, among other things, inject capital into Monte dei Paschi, if it became evident that private investors are unwilling to shore up the bank.

According to European rules, losses to shareholders and bondholders will likely be imposed if the Italian government rescues the lender.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

This article was published by The Wall Street Journal

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