Italy plans to shield MPS bondholders from losses in cash call - source
MILAN, Oct 25 (Reuters) - Italy intends to shield Monte dei Paschi's investors from losses as it prepares to pump more money into the bank following the collapse of a rescue deal Rome had been discussing with UniCredit, a source close to the matter said on Monday.
The source said the capital increase would take place as a market transaction, so as to avoid any 'burden sharing' with junior bondholders who must bear losses under European Union rules if the cash call were to be classed as state aid.
Rome had also planned to spare junior bondholders from losses as part of the UniCredit transaction, which would have required the state to recapitalise MPS before selling it to UniCredit.
(Reporting by Giuseppe Fonte; writing by Valentina Za; Editing by Kirsten Donovan)
