Paschi Falls to Record Low as MSCI Prepares to Remove From Index

Banca Monte dei Paschi di Siena SpA, the Italian bank saddled with bad debt and seeking a buyer, plunged to a record low after MSCI Inc. said it plans to pull the stock from that country’s index.

Shares in Italy’s third-largest bank fell as much as 13 percent, the lowest since they began trading in 1999, and were down 7 percent to 45 cents at 10:10 a.m.

MSCI said late Thursday it expects to remove Paschi from its index of Italian stocks after markets close on Feb. 29. The decision has prompted investors who track MSCI’s gauges to dump the stock, according to Vincenzo Longo, a strategist at IG Markets in Milan.

“Funds that track the MSCI indexes are forced to sell the shares,” Longo said by phone. The selloff adds to pressure on a bank whose shares have fallen 60 percent this year on concerns about its future.

Monte dei Paschi, 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.

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