Banca Monte dei Paschi di Siena SpA’s investors, backed by the foundation that has controlled the world’s oldest lender for 18 years, agreed to remove a cap that limits private owners’ voting rights as the lender seeks new funds.
Shareholders representing 53.7 percent of the bank’s capital backed a measure to scrap the 4 percent voting cap at a meeting in Siena today.
Chief Executive Officer Fabrizio Viola and Chairman Alessandro Profumo are seeking to revive the lender and lure investors to a 1 billion-euro ($1.3 billion) stock sale to help repay state aid and avert nationalization. The bank, engulfed by probes into alleged misconduct by former managers including false bookkeeping and regulatory obstruction, needs to return to profit this year to avoid handing over a stake to the government.
“If we don’t remove the 4 percent limit the bank would disappear,” Profumo told investors before the vote. Without the change, Paschi wouldn’t be able to raise funds to repay state aid, he said. “Unfortunately, there are no new investors on the horizon.”
Fondazione Monte dei Paschi di Siena, which owns about 34 percent of Paschi, was created in 1995. Non-profit banking foundations were created about two decades ago when the philanthropic arms of savings banks were split from their lending operations to pave the way for the industry’s privatization.
Today’s decision was not “avoidable,” Monte Paschi Foundation President Gabriello Mancini said before the vote.
Monte Paschi sought 4.1 billion euros in state aid in February, adding 2 billion euros to a previous bailout. The lender that month restated accounts to reflect losses on derivatives from 2008 and 2009 the former management had hidden in transactions first revealed by Bloomberg News in January.