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Italian bank backs €5bn capital boost plan

Italian bank Monte dei Paschi di Siena gave the go-ahead on Friday to a €5.0 billion equity raising that will boost its capital and allow it to repay a government bailout this year.

Published: 18 April 2014 16:25 CEST

Italian bank backs €5bn capital boost plan

Monte dei Paschi di Siena has given the go-ahead to a €5.0 billion equity raise. Photo: Fabio Muzzi/AFP

The bank said in a statement the share sale would give it a strong enough "capital buffer" to withstand EU bank stress tests in the current climate of "high uncertainty and limited visibility".

The increase will also allow the lender to speed up a restructuring plan, due to be completed by 2017, that includes 8,000 job cuts and the closure of 550 branches.

The Tuscan bank has to pay back by the end of the year some €4.0 billion in credit it received from the Italian government last year to stave off bankruptcy.

Chief executive Fabrizio Viola told Italian news channel SkyTG24 that the share sale would be carried out "starting in mid-June until mid-July".

The larger-than-expected raising will also put the bank out of risk of being nationalised, he added.

Instead, Monte dei Paschi said the share sale would put it in a better position to seize "opportunities linked to a possible recovery of macro-economic conditions".

Investors cheered the news, with the bank's share price rising 2.81 percent to 0.2375 euros after the move.

Friday's board meeting also called an extraordinary meeting of shareholders for May 20-22 that will have to give its own approval for the capital increase.

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Deutsche Bank to pay $130m to settle US bribery probes

A woman walks past the offices of Deutsche Bank in London. Photo: Tolga Akmen / AFP

The bribery case relates to illegal payments and to false reporting of those sums on the bank's books and records between 2009 and 2016, the Department of Justice said in a press release.

The bank “knowingly and wilfully” kept false records after employees conspired with a Saudi consultant to facilitate bribe payments of over $1 million to a decision maker, the DOJ said.

In another case, the bank paid more than $3 million “without invoices” to an Abu Dhabi consultant “who lacked qualifications… other than his family relationship with the client decision maker,” the DOJ said.

In addition to criminal fines and payments of ill-gotten gains, Deutsche Bank agreed to cooperate with government investigators under a three-year deferred prosecution agreement.

In the commodities fraud case, Deutsche Bank metals traders in New York, Singapore and London between 2008 and 2013 placed fake trade orders to profit by deceiving other market participants, the DOJ said.

The agreement took into account Deutsche Bank's cooperation with the probes, DOJ said.

“Deutsche Bank engaged in a criminal scheme to conceal payments to so-called consultants worldwide who served as conduits for bribes to foreign officials and others so that they could unfairly obtain and retain lucrative business projects,” said Acting US Attorney Seth D. DuCharme of the Eastern District of New York.

“This office will continue to hold responsible financial institutions that operate in the United States and engage in practices to facilitate criminal activity in order to increase their bottom line.”

“We take responsibility for these past actions, which took place between 2008 and 2017,” said Deutsche Bank spokesperson Dan Hunter, adding that the company has taken “significant remedial actions” including hiring staff and upgrading technology to address the shortcomings.

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