Meloni Adviser Says Paschi Should Delay Plans to Raise Capital

(Bloomberg) -- The top economic adviser to Giorgia Meloni, front-runner to become Italy’s next prime minister, called for a delay in Banca Monte dei Paschi di Siena SpA’s plans to raise capital.

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“We need to push back the decision on the capital increase,” Maurizio Leo, who coordinates the economics and finance department of Meloni’s Brothers of Italy party, said in an interview. “It is a difficult time and it is better to wait for the new government.”

The Siena-based lender is seeking to raise 2.5 billion euros ($2.5 billion) through new equity and to cut about 4,000 jobs as part of a plan to boost capital reserves and profitability. The capital raising is planned to start mid October, just few weeks after general elections.

Italy’s right-wing coalition, led by Brothers of Italy, is poised for a landslide win in Sept. 25 elections, according to the last available polls, before a blackout period was imposed. Under Italy’s political mechanisms there wouldn’t be enough time for the party to form a new government before the bank’s cash call starts.

The proposed rights offering is the latest in a long line of attempts to revamp the ailing lender, which was first bailed out in 2009. Monte Paschi canceled a previous cash call at the end of 2016 in a last-minute move, in favor of a rescue package from the Italian state.

Paschi dropped to a record low on Tuesday after a press report banks arranging its vital capital increase are pushing for a delay until next year because of market conditions.

“Paschi’s is an important operation, that needs to protect both jobs and a strategic asset for Italian economy,” said Leo.

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