UPDATE 1-Monte dei Paschi lifted by support for capital increase

lunes 3 de noviembre de 2014 10:26 GYT

(Adds Axa statement, sources)

MILAN/ROME Nov 3 (Reuters) - Key investors in Italy's Monte dei Paschi di Siena indicated that they would back the bank's latest rights issue, helping its shares to recover some lost ground after it failed a European financial health check.

The shares were up 6 percent at 0.64 euros by 1410 GMT. They had plunged 40 percent over the past five sessions after the European Central Bank (ECB) tests showed the bank faced a capital shortfall of 2.1 billion euros($2.6 billion).

French insurer Axa, which has a 3.7 percent stake in the Tuscan lender, was the first shareholder to publicly say it will buy into the rights issue -- the fourth since 2008. The Italian bank raised 5 billion euros as recently as June.

Another group of shareholders representing a combined stake of 9 percent and comprising the Monte dei Paschi banking foundation and Latin American investors BTG Pactual and Fintech, is also expected to back the capital increase, two sources with knowledge of the situation said.

"In the end I think all the main shareholders will take part, although no one is happy about the bitter medicine imposed by the ECB," one of the sources said, adding the capital increase was likely to take place in the first months of 2015.

BTG Pactual and Fintech, like other investors who purchased shares when the bank last tapped the market five months ago, have seen the stock fall more than 50 percent since.

"These shareholders have little alternative other than backing the plan: they'd be diluted otherwise and I'd be surprised to see it happen," said another source.

The world's oldest surviving bank has hired UBS and Citigroup to assess strategic options after it failed the ECB health check of lenders, designed to gauge the solidity of the euro zone's financial system.   Continuación...