Italy looks to sell up to 15% of Monte dei Paschi in share placement, sources say

MILAN (Reuters) -Italy aims to sell up to around 15% of Monte dei Paschi di Siena in an upcoming share placement, reducing the government's stake in the bailed-out bank to as low as 12%, two sources close to the matter told Reuters on Friday.

Italy currently holds 26.7% of Monte dei Paschi (MPS), the world's oldest bank still in business, and has pumped a total of 7 billion euros ($8 billion) into the lender, by taking it over in 2017 and shouldering the bulk of a make-or-break cash call in 2022.

On Thursday, Economy Minister Giancarlo Giorgetti said the Treasury aimed to carry out another market placement before the end of the year.

The two sources said the Treasury is looking to place a stake of around 10-15% in the bank with investors.

The Treasury, which has already cashed in nearly 1.6 billion euros by selling down its original 64% MPS stake, could raise up to 900 million euros from the latest sale.

European Union rules stipulate that state aid to banks can only be temporary, requiring Italy to eventually re-privatise MPS.

An attempt in 2021 to have UniCredit take over MPS, and compensate the Milanese bank for any risks, collapsed when Unicredit CEO Andrea Orcel raised his multi-billion demands to Italy's Treasury at the eleventh hour.

Since then MPS has restructured under former UniCredit executive Luigi Lovaglio and favourable court rulings have allowed it to release money it had set aside against legal risks following years of mismanagement.

In October 2022 Lovaglio pulled off a crucial stock issue selling new shares at 2 euros each, and used the bulk of the money to fund voluntary staff redundancies.

MPS shares have more than doubled in price since then to 4.9 euros each.

($1 = 0.9126 euros)

(Reporting by Valentina Za in Milan and Giuseppe Fonte in Rome; editing by Giulia Segreti and Susan Fenton)