Monte dei Paschi to launch share sale in last-ditch bid to avoid bailout

Banca Monte dei Paschi di Siena (MPS), the world's oldest-surviving lender, will launch a share sale on Monday (19 December), in a bid to avoid being nationalised.

The lender, Italy's third-largest bank, needs to raise €5bn (£4.2bn) in fresh capital by the end of 2017 to avoid being bailed out by the Italian government as it battles against some €46bn of non-performing loans.

In a statement, the bank said the share sale will begin at 1pm GMT and 65% of the new shares to go on sale will be reserved for institutional investors and will be priced between €1 and €24.9. MPS, whose share price has fallen by more than 80% this year, has also relaunched a debt-for-equity swap offer, asking investors to convert their junior bonds they own into shares.

The lender ran a similar offer in recent weeks, although junior bondholders only converted €1bn worth of bonds out of the over €4bn currently in circulation.

Earlier this month, MPS had asked until 20 January to raise the money it needs to avoid a bailout but the request was turned down by the European Central Bank, on the grounds that a delay would achieve little.

The Italian government has reportedly been working on a rescue plan for the bank, should it become evident that private investors were unwilling to shore up the lender's finances. Italian banks were among the worst-hit stocks in the immediate aftermath of the 4 December referendum, which saw Prime Minister Matteo Renzi tender his resignation, amid increasing fears that ongoing attempts to bolster the position of several lenders could be in jeopardy.

According to reports, Rome was considering applying for a €15bn bailout, which would be used to rescue MPS and a number of other smaller lenders, which could see the Italian government could take a €2bn controlling stake in MPS, bringing its ownership of the bank up to 40%.