UniCredit and Italy in talks to acquire Monte dei Paschi Reuters

© Reuters. File picture: UBS Investment Bank President Andrea Auxer arrived in London to provide evidence for the Bank of Parliament’s investigation into the Libor interest rate held in London on January 9, 2013.REUTERS/Olivia Harris/File Photo

Authors: Valentina Za and Giuseppe Fonte

MILAN (Reuters)-UniCredit said Thursday that it will discuss a potential acquisition of Monte dei Paschi with the Italian government, a move that may allow the Tuscan bank to return to private ownership four years after being rescued by the state.

UniCredit said in a statement that it and the government have approved a potential transaction involving Monte dei Paschi’s business operations and having “well-defined boundaries.”

Italy rescued Monte dei Paschi from the brink of collapse in 2017, but found it difficult to sell because potential buyers were discouraged by the legal risks and bad debts accumulated by this Tuscan lender after years of mismanagement.

UniCredit has always been regarded by the government as the preferred buyer, but Andrea Orcel, who took over as the bank’s chief executive officer earlier this year, has not yet expressed enthusiasm for such a deal.

Reuters reported on July 21 that despite Orcel’s public silence, the government is reportedly working hard to make Monte dei Paschi attractive to UniCredit.

UniCredit stated that the transaction it is exploring will exclude all “special litigation” related to Monte dei Paschi and its non-performing loans. This will be “neutral” to the bank’s capital level.

UniCredit stated that under these terms, the transaction “will significantly improve the group’s future profitability.”

“During due diligence, we will conduct a detailed analysis and evaluate whether we can design a transaction that meets these agreed parameters,” Orcel said in a statement.

“Then, only then can we decide whether to proceed,” he added.

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