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Monte Paschi Drops After Loss on Bad Loans: Milan Mover

Pedestrians shelter from the rain beneath umbrellas as they pass through Piazza Salimbeni, near the headquarters of Banca Monte dei Paschi di Siena SpA in Siena. Photographer: Alessia Pierdomenico/Bloomberg
Pedestrians shelter from the rain beneath umbrellas as they pass through Piazza Salimbeni, near the headquarters of Banca Monte dei Paschi di Siena SpA in Siena. Photographer: Alessia Pierdomenico/Bloomberg

April 2 (Bloomberg) -- Banca Monte dei Paschi di Siena SpA, Italy’s third-biggest bank, fell as much as 13 percent in Milan trading after posting a bigger-than-estimated quarterly loss on soaring bad-loan provisions.

Monte Paschi declined 6.7 percent to 17.26 cents by 12:07 p.m. in Milan, bringing the decline this year to 24 percent. The fourth-quarter net loss was 1.59 billion euros ($2 billion), the Siena-based lender said after the close of trading on March 28. The loss was more than double the 686.3 million-euro loss estimated by analysts in a Bloomberg survey.

Monte Paschi, engulfed by investigations of its former managers, is selling assets, cutting costs and reducing risks to return to profit. Chief Executive Officer Fabrizio Viola and Chairman Alessandro Profumo, appointed last year to turn around the 541-year-old bank, are trying to regain the confidence of investors after the lender was forced to seek a second state rescue in four years and take a 730 million-euro hit to assets after uncovering transactions that hid earlier losses.

Clients withdrew “several” billion euros of deposits from Monte Paschi after it emerged the bank had engaged in “illicit” transactions, the lender said in a report posted on its website last week.

“We were somewhat impacted in February but we were quick in recovering ground in March,” Chief Financial Officer Bernardo Mingrone said during the conference call on March 28, the last day of trading before the Easter holidays. He declined to provide the level of deposits in the first quarter.

Loan-loss provisions increased to 1.37 billion euros in the fourth quarter from 464.3 million euros a year earlier. Revenue declined 37 percent to 778.3 million euros, hurt by a net interest income drop of 52 percent to 434.5 million euros.

To contact the reporter on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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