Monte Paschi’s profit struggle complicates exit from state control

Bloomberg

Banca Monte deiPaschi di Siena SpA had another tough quarter for earnings, showing how far the state-rescued Italian lender has to go before it can re-emerge as a
private company.
Second-quarter net income fell 35 percent to 65.3 million euros ($72 million) from a year earlier hurt by lower income from lending and fees, the Siena-based bank said. Monte Paschi Chairman StefaniaBariatti said in February that the bank will start working with the government on an exit plan at the end of this year.
Chief Executive Officer Marco Morelli is seeking to turn around the lender by cutting costs, selling non-performing loans and real estate and curbing risk.
Undermined by souring debt and derivatives deals that backfired, Monte Paschi received 5.4 billion euros in aid as part of an 8.3 billi-on-euro recapitalization that resulted in the state owning about
68 percent of the lender.
Provisions for loan losses fell 20 percent as bad loans were taken off the books. The bank said it agreed to sell a package of bad debt to
Cerberus Capital Management for about 455 million euros. The day before it sold unlikely-to-pay loans with a face value of 700 million euros to Illimity Bank SpA.