Paschi Swings as Regulators Try to Stabilize Stock Trading

  • Italian bank recovers afer falls as much as 4.1% in trading
  • Lender is seen as `risky' without merger, analyst says

Banca Monte dei Paschi di Siena SpA swung in Milan trading after regulators sought to stabilize shares of the world’s oldest bank, which dropped 24 percent in two weeks.

Monte dei Paschi, Italy’s third-largest bank, fell as much as 4.1 percent to 89 cents, the lowest since shares began trading in 1999, before rising 3.4 percent to 95.8 cents as of 12:08 p.m. The decline this year has cut the bank’s market value to about 2.8 billion euros ($3 billion).

Italian market regulator Consob imposed a ban on short selling of the stock for Tuesday’s session. The bank, bailed out twice since 2009, has been engulfed by legal probes into former managers who had masked losses. After tapping investors for funds to replenish capital, Chief Executive Officer Fabrizio Viola is now seeking a buyer to help restore profit as bad loans mount.

“The stock is perceived too risky with the bank still far from the expected merger with another lender, a crucial step for a turnaround,” said Vincenzo Longo, a Milan-based strategist at IG Markets. “There are concerns that large funds that invested in the lender in the latest share sales are questioning the bank’s recovery and abandoning their bet.”

Before it's here, it's on the Bloomberg Terminal.