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Report: Monte dei Paschi submits NPL sale, cash call plan to ECB


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Report: Monte dei Paschi submits NPL sale, cash call plan to ECB

Banca Montedei Paschi di Siena SpA has submitted a plan to the to sell its entire portfolioof dud loans at a loss of €1 billion to €2.7 billion, Reuters reported July 21,citing "a source familiar with the matter."

The €10 billion bad loan portfolio is counted in Monte deiPaschi's books at 37% of face value, Reuters noted, with the source saying theloans could be sold for between 27% and 33% of their nominal value. Threesources told the newswire that the ECB would review Monte dei Paschi's proposalJuly 21.

The single source added that the plan also includes a cashcall, underwritten either by a consortium of banks or by the Italian state, subjectto approval from relevant authorities, the report added.

The ECB in the week of July 4 told Monte dei Paschi toreduce its stock ofnonperforming loans by 40% through 2018. The lender is expected to fare poorly inEuropean Banking Authority stress tests to be revealed July 29, Reuters noted.