Business

World's oldest bank Monte dei Paschi gets state support

  • 26 June 2012
  • From the section Business

The world's oldest bank, Italy's Banca Monte dei Paschi di Siena, has received state help to bolster its finances.

The Italian government has agreed to provide 2bn euros ($2.5bn; £1.6bn) of support via buying especially created bonds from the bank. It will also renew an existing loan bringing its total support to 3.9bn euros.

The bonds can be converted into equity at the bank's request.

The state aid still needs to be approved by the European Commission.

The aid was necessary because the bank had admitted it was "impossible" to find private investors to boost its funds owing to "currently highly volatile market conditions" as the eurozone crisis intensifies, the government said.

The support will allow the Tuscan bank, founded in 1472, to bring the amount of top quality assets it holds, its core tier one capital ratio, to 9% of total assets, thereby conforming to the rules of the European Banking Authority (EBA).