Reuters: Regulatory News: Italy gives state backing to MPS

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Italy gives state backing to MPS Jun 26th 2012, 12:01 ROME, June 26 | Tue Jun 26, 2012 8:01am EDT ROME, June 26 (Reuters) - The Italian government agreed on Tuesday to give state backing to Banca Monte dei Paschi di Siena in the form of special bonds that will be underwritten by the state, plugging a capital gap estimated to be between 1.3 and 1.7 billion euros. In a statement, the government said it would underwrite up to 2 billion euros of special bonds issued by MPS, similar to previous instruments known as 'Tremonti bonds', which Italy's third-largest bank MPS used in 2009 when it was first hit by the global financial crisis. The new instruments will replace 1.9 billion euros of outstanding Tremonti bonds, bringing the total state intervention in support of MPS to up to 3.9 billion euros, the government said. The state aid scheme for MPS needs to be approved by the European Commission.

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