MPS eyes strategy revamp after failed UniCredit talks – Reuters

Banca Monte dei Paschi di Siena SpA CEO Guido Bastianini said the Italian lender is planning to overhaul a strategy that was stalled by merger talks with UniCredit SpA, Reuters reported.

The bank has been looking at raising capital of €2.5 billion in a five-year plan that includes reducing legal and business risks, laying off more than 2,600 employees and shutting down the bank's unprofitable operations. Finalization of the plan is still pending because of the merger negotiations, which later collapsed because the government and UniCredit were not able to meet the value of capital needed to be raised to push the proposed deal ahead.

Bastianini told a parliamentary hearing that the strategy will probably be revamped because MPS has to prove that it can be self-reliant before EU regulators clear the cash call costing billions of euros, which will mostly be shouldered by Italy. The cash call's cost and the number of layoffs are yet to be determined, Bastianini said, although he noted that cutting 4,000 jobs will cost €950 million.

MPS is analyzing a number of initiatives and will carry out a cost-benefit analysis before deciding whether to go ahead with any legal and loan risk deals, Bastianini added.

The Treasury still plans to implement measures that will help remove MPS' remaining problem loans and nonordinary legal risks, sources have told the news wire. The plan also includes spinning off branches in the south of the country.