Italian bank to launch share issue in December

This picture taken on January 19, 2016 shows the logo of the Monte Dei Paschi di Siena bank in Milan. Italian banking stocks saw another day of meltdown on January 19, 2016 as skittish investors were spooked by the country's burgeoning toxic loan crisis. The world's oldest bank, Banca Monte dei Paschi di Siena (BMPS), was hit hardest and was briefly suspended from trading following an equally bleak on January 18 which saw stocks plummet across the board. / AFP PHOTO / GIUSEPPE CACACE

Italian bank Monte dei Paschi di Siena (BMPS.MI) says it would offer new shares between Monday and Thursday in a last ditch attempt to raise 5 billion euros ($5.2 billion) in capital this year and avoid a state bailout.

Monte dei Paschi said its share offer shafor institutional investors, which accounts for 65 percent of the total, would run until 1300 GMT on Thursday.

The offer reserved for current shareholders and retail investors will end instead at 1300 GMT on Wednesday.

In a bid to raise funds, “Monte dei Paschi has also extended a voluntary debt-to-equity offer to retail investors owning 2.1 billion euros of its junior debt. The offer runs from December 16 to 21”.

Italy is ready to step in to rescue the country’s third-largest bank should the fundraising plan fail.

Under new rules Europe introduced in the wake of the financial crisis to shield taxpayers, investors in a failing lender must bear losses before public money can be tapped.

A source familiar with the matter on Friday said a state bailout of Monte dei Paschi would entail a forced conversion of 4.1 billion euros worth of subordinated bonds into shares.

Reuters/Hauwa M.