Beautiful Italian Bank Begins Second 545 Years With Spring In Its Step

Jamie Dinan to the rescue of the world's oldest, prettiest lender.
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By Vyacheslav Argenberg (http://www.flickr.com/photos/argenberg/312122277/) [CC BY 2.0], via Wikimedia Commons

By Vyacheslav Argenberg (http://www.flickr.com/photos/argenberg/312122277/) [CC BY 2.0], via Wikimedia Commons

Here’s a sentence we thought we’d never write: Things are looking up for Banca Monte dei Paschi di Siena.

After fetchingly and relatively quietly passing its first half-millennium collecting the lambing profits of the grand dukes of Tuscany and pioneering the mortgage business in Italy, it decided to go public and then get aggressive. This did not end well, and as a result all Italians got a lump of MPS coal in their Christmas stockings last year.

But for the last week, things could hardly have gone better. First, the EU signed off on the aforementioned controversial bailout plan. And now a key part of that plan, selling off the mountain of bad debt that makes the non-Italian speaker wonder whether “Paschi” means “non-performing loans” in the language, seems to be coming into place.

Banca Monte dei Paschi di Siena SpA, whose survival may depend on a bailout from Italy, is in exclusive talks to sell a batch of non-performing loans to York Capital Management LP, according to a person with knowledge of the matter.

The loans have a face value of 240 million euros ($270 million) and were made to Impreme SpA, a property developer owned by Rome’s Mezzaroma family, said the person, who asked not to be identified because the talks are private. York Capital, a New York-based hedge fund, is offering more than 40 cents on the euro for the debt, the person said.

Sure, it’s only 1% of the total debt pile in which MPS is drowning, but it’s a start. And it’s a lot more than the 25% the bank expects to get, on average, for the stuff.

Hedge Fund Said in Talks to Buy $270 Million Monte Paschi Loans [Bloomberg]
EU, Rome seal preliminary rescue deal for Monte dei Paschi [Reuters]

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