By Mauro Orru 
 

Banca Monte dei Paschi di Siena SpA said late Monday that it has approved a plan to transfer non-performing exposures, deferred tax assets, other assets, financial debt, other liabilities and net equity to Asset Management Company SpA, an Italian state-owned manager of bad loans.

The Italian bank, in which the Italian government has a stake of more than 68%, said that the deal envisages the transfer to AMCO of non-performing exposures amounting to 8.14 billion euros ($9.15 billion), liabilities of EUR3.18 billion from a bridge loan backed by JPMorgan Chase & Co. and UBS Group AG, as well as net equity of EUR1.09 billion.

The transfer is set to bring about a significant improvement in the bank's risk profile and a reduction in the cost of funding.

Monte dei Paschi has in recent years undergone a major overhaul that included state recapitalization, the disposal of billions in bad loans and job cuts.

MPS Capital Services Banca per le Imprese SpA, 100% owned by Monte dei Paschi, holds part of the assets and liabilities to be transferred, the bank said, and the transfer will take place through a demerger.

The Italian government stake in Monte dei Paschi could shrink to just under 64% after the deal, depending on the mechanics of the transaction.

The demerger is expected to be effective as of Dec. 1, the bank said.

The announcement comes a month after Monte dei Paschi said it was in talks with Italy's market regulator Consob and the European Central Bank to define "the relevant regulatory steps" before the transaction can start.

 

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

 

(END) Dow Jones Newswires

June 30, 2020 02:01 ET (06:01 GMT)

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