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Monte dei Paschi says ECB wants it to raise €8.8bn

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The European Central Bank has ordered Italy’s Monte dei Paschi di Sienna to raise €8.8 billion, up from the €5 billion previously indicated, the lender said in a statement Monday.

Monte dei Paschi stated it had officially asked the ECB on Friday to give the green light to its precautionary recapitalization, after the Italian government approved a bailout for the ailing lender.

In a reply, the ECB stated it had recalculated the capital it believed was needed, and had adjusted up the total required because Monte dei Paschi’s liquidity position had rapidly deteriorated between November 30 and December 21, the Tuscan lender said. In that time, Monte dei Paschi’s net liquidity at one month declined to  €7.7 billion, or 4.78 percent of its activities, from €12.1 billion and 7.6 percent.

“The bank has promptly started talks with the competent authorities to understand the methodologies underlying the ECB’s calculations and introduce the measures for a precautionary recapitalization,” Monte dei Paschi said in its statement.

The Italian government has approved a €20 billion fund to save Monte dei Paschi, the country’s third-largest lender and world’s oldest bank, and to restore the country’s banking system to health.


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