Monte Paschi Said in Talks to Sell 1 Billion Euros of Bad Loans

Banca Monte dei Paschi di Siena SpA is seeking offers for about 1 billion euros ($1.1 billion) of non-performing consumer loans as the bank tries to shore up capital, said a person with knowledge of the matter.

Monte Paschi is selling bad assets from its Consum.it unit after abandoning the sale of the whole company last year, said the person, who asked not to be identified because the discussions are private. The bank will offer another 1 billion of loans, these not related to the consumer unit, later this year, the person said.

The current group of loans has attracted about a dozen potential bidders, said the person. A spokesman for Monte Paschi declined to comment.

Monte Paschi, which has tapped Italian taxpayers for two bailouts since 2009, is carrying 23 billion euros in impaired loans, representing 19 percent of total loans to customers. Shareholders will meet next week to approve a 3 billion-euro stock sale, part of efforts to plug a capital gap uncovered during the European Central Bank’s balance-sheet review last year.

The bank is also in talks to outsource management of 500 million euros of bad loans, the person said. It already outsourced 3 billion euros of loans in the first quarter.

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