ECB to open inquiry into leaks on BMPS deadline

Frankfurt am Main / AFP

The ECB said it would open an inquiry after its refusal to extend a deadline for Italy’s troubled Monte dei Paschi di Siena bank (BMPS) was leaked to the media before the lender was formally notified of the decision.
“An internal inquiry will be launched,” a spokesman for the Frankfurt-based European Central Bank said, confirming Italian media reports.
The spokesman declined to give further details.
Shares in BMPS, the world’s oldest bank, tumbled by more than 10 percent Friday on reports that the ECB’s supervisory board had denied it more time to raise the cash it needs to avoid being wound down.
The ECB had declined to comment on Friday, while BMPS itself said it had received no official communication on the matter.
Saddled with bad debts, BMPS is trying to pull off a five billion euro ($5.38 billion) equity injection and had requested the extension of a deadline to find the money from the end of December to January 20.
The ailing lender had argued that the political instability created by Prime Minister Matteo Renzi’s resignation had left investors reluctant to commit funds.
But according to media reports, citing unnamed sources, the ECB board ruled that the extra weeks would be of little use in turning around the historic bank.
The ECB’s decision has piled pressure on the Italian government to step in should BMPS fail to raise the necessary funds from private
investors.