Monte dei Paschi Allows VPO Swap Of Retail Bondholders Shares

The Italian bank, Monte dei Paschi intends to introduce a voluntary public offering to swap shares of previous retail bondholders which in a way becomes a bailout into a senior debt. Although, there is no specific date for the offer which was deemed to begin before the end of October which is anticipated to push through in three weeks.

Moreover, the financial institution issued new shares among its secondary bondholders whereas the debts were transposed into an equity to follow the rules of the European Union protecting taxpayers through the enforcement losses on investors in the event of a rescue.

The Treasury has pledged worth 1.5 billion euros to buy their shares to recompense retail bondholders who bought the junior debt but ignoring the inherent risks. The bank released a statement saying that stocks included are senior debts issue with maturity date set on May 15, 2018, costing 1.536 billion euros.

Consequently, the Treasury stake in the bank will increase to 67.76 percent compared to the present figure of 52.18 percent The government aspires to gain profit on its investment for long-term by holding its shares.

The bank is also set to commence trading in the latter half of October since the suspension in December last year according to the reports on Thursday.

The European Union officials assented to the recapitalization of the state in the beginning of July following the bank has consented to radical overhaul that includes job cuts and settling of bad debt.