By Giuseppe Fonte and Valentina Za
ROME (Reuters) - Italy trusts it will be able to strike alliances for bailed-out bank Monte dei Paschi di Siena (MPS) this year, the economy minister said on Tuesday.
After rescuing MPS in 2017 and gaining an initial 68% stake, Rome has cut it in recent months to just below 27% through two successive market placements.
"The government is confident 2024 will be a good year to find strategic partners for Monte dei Paschi," Minister Giancarlo Giorgetti told a press conference.
Italy now needs to cut the stake further to meet privatisation commitments agreed with the European Union to clear the 5.4 billion euro ($5.88 billion) bailout, two people with knowledge of the matter told Reuters.
While a further placement remains an option once a 90-day lock-up period expires after the last stake sale, Rome has favoured a more "structural" solution for the bank.
Both Giorgetti and conservative Prime Minister Giorgia Meloni have repeatedly said the government would try to increase banking competition when privatising MPS.
This has raised the prospect of a potential deal with mid-sized rivals, namely Banco BPM (LON:0RLA) and BPER Banca, Italy's third and fourth largest banks respectively.
Both banks have denied any interest in MPS. Two years ago heavyweight UniCredit (LON:0RLS) derailed the government's privatisation efforts when it walked away from talks with the Treasury to take over MPS, forcing Rome to seek more time from the EU.
A merger would strengthen the bank by boosting its size and is preferred from a financial stability standpoint, separate people close to the privatisation process have told Reuters in the past.
However, in the absence of a deal, the Treasury could try to attract long-term investors, who would form a core group of shareholders and provide more stability to the bank, which has seen fund ownership increase with the two share placements, one of the sources added on Tuesday.
The world's oldest bank still in business, MPS was founded in 1472. A misguided acquisition on the eve of the global financial crisis, mismanagement and a derivatives scandal brought it to the brink of collapse.
Under CEO Luigi Lovaglio, a veteran UniCredit executive, MPS is distributing part of its 2023 profits as dividends, having resumed payments two years ahead of target.
The MPS brand is considered an asset that should be preserved after the bank managed to retain depositors throughout its crisis years, the sources said.
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