Italy's Monte dei Paschi says cash call 96.3% covered


Underwriters left with 93 mln euros in unsold stock


Concerns about unsold shares risked derailing capital raise

By Valentina Za

MILAN, Nov 3 (Reuters) - Monte dei Paschi di Siena BMPS.MI on Thursday said investors had taken up 96.3% of its 2.5 billion euro ($2.4 billion) new share issue, leaving less than 100 million euros on the books of the banks that agreed to back the risky sale.

Concerns about tapping markets against the backdrop of the Ukraine war, record inflation and an impending economic slump had risked derailing Monte dei Paschi's (MPS) seventh cash call in 14 years.

MPS had to delay approval of the sale's terms until it managed to secure support from a group of eight banks and London-based fund Algebris for the 900 million euro portion of the offer that would not be covered by the state.

European Union laws curbing state aid to banks capped the Italian taxpayers' contribution at 1.6 billion euros, reflecting Rome's 64% stake in MPS.

Underwriters, in turn, agreed to guarantee the private part of the offer only on condition that MPS secured sub-underwriting commitments from investors ready to mop up at least half of the sum.

Underwriters led by global coordinators Bank of America BAC.N , Citigroup C.N , Credit Suisse CSGN.S and Mediobanca MDBI.MI will be left holding 93 million euros in shares, MPS said.

MPS has agreed to pay 125 million euros in fees to underwriters, a much higher than normal figure, of which roughly a quarter will be flipped over to the sub-underwriters.

Aside from the state, MPS' existing shareholders, including many small savers left out of pocket by previous share sales, mostly snubbed the offer.

That left MPS and the Treasury scrambling to assemble a safety net comprising the bank's commercial partners such as French insurer AXA AXAF.PA as well as MPS' junior bondholders such as U.S fund Pimco.

The Treasury also relied on the help of banking foundations, charitable entities which have long been shareholders in the country's lenders, sometimes only to see their fortunes decline with those of the banks they owned.

Having committed up to 200 million euros towards the issue, AXA is expected to emerge as the Tuscan bank's second-biggest shareholder.

($1 = 1.0265 euro) ($1 = 1.0259 euros)
Reporting by Valentina Za; Editing by Jonathan Oatis and Andrea Ricci

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