Italy Treasury meets local authorities on potential Monte dei Paschi merger – sources

ROME (Reuters) – Italy’s Treasury met Monte dei Paschi’s banking foundation and local authorities on Tuesday to discuss the impact of a potential merger of state-owned Monte dei Paschi (MPS) on the economy of Siena and the surrounding areas, people with knowledge of the meeting said.

The talks, held in Rome, were also over the out-of-court request for damages against the Tuscan bank made by the banking foundation in July and worth 3.8 billion euros, the sources added.

After pumping 5.4 billion euros into MPS as part of a 2017 rescue for Italy’s oldest bank, Rome is scrambling to find a merger partner with the bank to cut its 64% stake under the terms of the bailout agreed with European Union authorities.

The Treasury has been discussing a possible tie-up with UniCredit, and MPS has said its board would meet on Jan. 19 to approve a plan to tackle its capital shortfall, as requested by the European Central Bank.

“Local institutions have asked for MPS to keep its headquarters in Siena and for the bank’s brand to be maintained,” one of the sources told Reuters.

One of the main issues for a potential MPS merger has been that of maintaining jobs in the area around the Tuscan town of Siena, where many work for the bank.

The Treasury declined to comment.