Sale of former bankrupt bank Monte dei Paschi threatens to fail

Talks about the sale of the Italian state Bank Monte dei Paschi (MPS) to competitor UniCredit, according to informed sources, are on the verge of collapse. Two people familiar with the talks told Reuters news agency that the reason was the wild disagreements between the government and UniCredit, the parent company of Austrian Bank, over an expensive recapitalization of MPS.

Recently, there was talk of a capital injection of more than seven billion euros from the state so that Unicredit would acquire at least parts of the MPS. One of the initiators said there was also dispute over the scope of job cuts and liability risks. The other source said the two sides had come to the conclusion that an agreement based on the terms that had been in place since the talks began in July was not possible.

UniCredit did not respond to this comment. The government initially received no response.

Monte dei Paschi is the oldest bank in the world. Italy saved the Tuscan house of finance from collapse in 2017 with 5.4 billion euros. The plan is to close the country’s 64 percent stake in MBS by mid-2022. Negotiations with Unicredit have recently entered a critical phase. It was already expected that a preliminary agreement would be reached by Unicredit’s management meeting on the quarterly results on October 27.