Monte Paschi Is Said to Prepare Junior Bond Sale for Next Week

Jan 12 2019, 2:03 PMJan 12 2019, 3:02 PMJanuary 12 2019, 2:03 PMJanuary 12 2019, 3:02 PM

(Bloomberg) -- Banca Monte dei Paschi di Siena SpA is preparing to sell junior bonds and will contact possible investors as soon as next week, a person with knowledge of the matter said.

Monte Paschi is attempting to issue the second-tier capital after it failed to sell the securities last year amid market turmoil. The lender said in a statement late Friday that the European Central Bank warned in a letter that its capital position was weaker after it was unable to issue a second tranche of Tier 2 bonds before the end of last year.

The Siena-based bank said it will include details of the ECB’s draft letter in an offer document for the securities it plans to sell.

Chief Executive Officer Marco Morelli is seeking to turn around the rescued lender by cutting costs, selling non-performing loans and curbing risks. The ECB highlighted weaknesses the bank needs to address, including boosting profitability, which it said is “underperforming” the restructuring plan.