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Banca Monte dei Paschi di Siena SpA : Monte Paschi CEO sees capital increase in 2014-report

04/26/2013 | 03:33am US/Eastern
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Italy's Banca Monte dei Paschi di Siena could hold its planned capital increase of 1 billion euros ($1.30 billion) in 2014, and does not rule out more asset sales, chief executive Fabrizio Viola said on Friday.

Viola told Il Sole-24 Ore he hoped the bailed-out bank's business plan, which calls for a capital increase, return to profitability and disposals, would help it avoid nationalization.

"We think that conditions will be right to hold the capital increase in 2014," Viola said in an interview, adding the offering would be aimed primarily at institutional investors.

Italy's No. 3 bank was forced to seek state aid for the second time since 2009 after becoming one of just four European lenders that failed to meet tougher capital requirements set by regulators.

Under a loan scheme the bank will issue around 4 billion euros of bonds to the Italian Treasury.

If the bank is unable to pay the coupon on the bonds it will have to issue shares. Some analysts have said the bank will not be able to pay the loans any time soon, raising the prospect the state will not just be a minority shareholder.

Viola said he was working as hard as he could to avoid the state becoming a majority shareholder.

"One thing is having the state as minority shareholder another is imagining the majority becomes public: this latter is certainly a possible scenario but the bank is committed to avoid it," he said.

The world's oldest bank was rocked this year by a series of risky derivatives trades which were partly behind huge losses forcing it to take a state bailout.

He said the bank's new business plan would be ready to submit to Brussels for a review "not later than June." The new plan will take Italy's worsening economy into account, he said.

The bank is making progress on its cost-cutting plan, and should reach two-thirds of its 2015 target by the end of this year, he said.

(Reporting By Stephen Jewkes; Editing by Helen Massy-Beresford)

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