(Bloomberg) -- Banca Monte dei Paschi di Siena SpA climbed the most in two weeks, paring last week's drop, amid speculation that the troubled Italian lender may be attracting investors for its crucial 5 billion-euro ($5.5-billion) capital increase.
The shares rose as much as 18 percent to 25 cents in Milan trading Monday, following a 20 percent decline last week. The stock has fallen by 80 percent this year, compared with the 18 percent decline for the Bloomberg Banks and Financial Services Index. Monte Paschi was up 14 percent as of 11:52 a.m.
“The stock is very volatile and its movements are purely speculative not driven by fundamentals,” Vincenzo Longo, a Milan-based strategist at IG Markets, said by phone. “Speculation on the bank's ongoing roadshow to lure investors in the bank's capital hike are contributing to the stock movements, which are amplified by the current stock prices.”
Qatar's sovereign wealth fund, which was contacted by Monte Paschi's management, has expressed preliminary interest in participating in the bank's cash call and a formal commitment may be signed in the next few days, Italian newspaper Milano Finanza reported Saturday, without saying where it got the information.
“We consider the entry of new shareholders as crucial for the success of the capital increase,” Manuela Meroni, an analyst at Banca IMI SpA, wrote in note Monday.
Monte Paschi Chief Executive Officer Marco Morelli, who took the job less than two months ago, is seeking to persuade shareholders that the troubled bank can turn a corner by shedding bad loans, raising capital and reorganizing its business. Morelli is traveling from Asia to America to hold talks with potential investors to win support for the capital increase by the end of the year.
Monte Paschi is also selling 28 billion euros of bad loans as well as its platform to manage bad debt as part of the turnaround plan. Binding offers for the platform from remaining bidders for Cerved Credit Management SpA and doBank SpA are due by Monday, according to Italian press reports.
To contact the reporters on this story: Sonia Sirletti in Milan at ssirletti@bloomberg.net, Francesca Cinelli in Milan at fcinelli@bloomberg.net. To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net, Ross Larsen, Andrew Blackman
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