Paschi Approves Capital-Raising Plan, Forms Bank Consortium

Banca Monte dei Paschi di Siena SpA approved a plan to tap investors for the third time in two years by selling stock to replenish capital, a board member said after Friday’s meeting ended.

The lender has formed a consortium of banks to manage the sale, Antonino Turicchi said in Siena.

Monte Paschi’s plan follows a share selloff that wiped 74 percent off the bank’s market value this year as concerns mounted about its capital strength. While Monte Paschi is seeking to raise funds through private means, Italy had held talks with the European Commission to back the bank’s recapitalization with state funds.

Monte Paschi’s profit rose to 208.8 million euros in the second quarter, from 185.2 million euros in the year-earlier period, the company said in a statement Friday. That compares with an estimate of a loss of 54 million euros based on six analysts surveyed by Bloomberg. Profit was bolstered by a tax gain and lower provisions for bad loans.

Paschi’s transitional common equity Tier 1 ratio, a measure of financial strength, rose to 12.1 percent as of June 30 from 11.7 percent at the end of March.

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