Monte dei Paschi di Siena sets aside more money for bad loans

Wednesday 12 March 2014 11.00
Monte dei Paschi di Siena reports loss of €1.44 billion for last year
Monte dei Paschi di Siena reports loss of €1.44 billion for last year

Troubled Italian lender Monte dei Paschi di Siena posted a higher than expected 2013 loss of €1.44 billion as it was forced to set aside more money against bad loans ahead of a health check of European banks.

Analysts had forecast a loss of €882m, according to a consensus distributed by the bank.

The 2013 result compared with a loss of €3.17 billion in 2012 and was the third consecutive loss for the Siena-based lender bailed out by the Italian government last year with €4.1 billion in state aid.

Writedowns on bad debts totalled €2.75 billion in 2013, €1.2 billion of which came in the fourth quarter as the bank sought to clean up its balance sheet in the run-up to the European Central Bank's asset quality review.

Souring loans stemming from Italy's longest recession since World War Two have become the biggest problem for lenders in the the euro zone's third-largest economy, eating into profits and absorbing precious capital. 

UniCredit, Italy's biggest bank by assets, this week posted a record loss of €14 billion, hit by loan loss provisions and writedowns on past acquisitions. 

Monte dei Paschi said today that its Core Tier 1 capital ratio stood at 10% at the end of 2013. That is below the 11.1% recorded in September and includes the state aid, the bulk of which Monte dei Paschi is due to reimburse this year.

The bank also said it had renewed a pre-underwriting agreement with banks for an already announced €3 billion capital increase to take place after mid-May.