Reuters: Financial Services and Real Estate: Monte Paschi to cut financial portfolio, branches-press

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Monte Paschi to cut financial portfolio, branches-press Apr 1st 2012, 09:55 MILAN, April 1 | Sun Apr 1, 2012 5:55am EDT MILAN, April 1 (Reuters) - Banca Monte dei Paschi di Siena will sharply reduce its financial portfolio, which includes 26 billion euros of Italian government bonds, and cut 150 branches as it seeks to restore profitability, its director general said on Sunday. In an interview with financial daily Il Sole 24 Ore, Fabrizio Viola also said there were no merger plans on the horizon for Italy's third biggest lender, which this week reported a 4.69 billion euros net loss for 2011. Viola will unveil in May a three-year business plan to relaunch the bank, which was hit hard by the euro zone debt crisis because of its big exposure to Italian government bonds and which must plug a 3.3 billion euro capital shortfall by June at the request of European regulators. Viola said the shortfall identified by the European Banking Authority was entirely related to the marking-to-market valuation of the bank's Italian government bond holdings, which account for nearly 70 percent of its 38 billion-euro financial portfolio. "On this front we need to plan for some sort of exit strategy. We will have to gradually reduce our financial portfolio by at least 10 billion euros," Viola said. "I want a bank that is less dependent on external factors." He also said the Tuscan bank, the world's oldest, would cut or sell around 150 branches - 5 percent of its network - and refocus on local, retail operations. The bank's share price has fallen nearly 13 percent since Viola, who was hired in January and who will soon become the bank's first chief executive, presented a disappointing set of results for 2011 on Thursday. The bigger than expected net loss was due mostly to writedowns on goodwill for 4.5 billion euros, but even excluding one-off items, the bank reported a sharp drop in customer deposits and loans as well as higher loan losses. Viola dismissed as "fantasy" speculation that the arrival of Alessandro Profumo, the former chief executive of UniCredit who will be formally appointed chairman of Monte Paschi at a shareholder meeting this month, would pave the way for an international tie-up. "As far as I am aware in the future for Monte there are no mergers. Our commitment is precisely that of ensuring the autonomy and independence of the bank," he said. "We have met (with Profumo) ... we agree on the business strategy. We both think that running to follow the big ones in the sector is wrong." The bank also faces a shake-up of its shareholder structure as its top shareholder, a charitable foundation, is selling down its stake to repay around 1 billion euros of debts. On Friday, the Monte dei Paschi foundation said it had so far sold an 11.45 percent stake, netting 490 million euros. It still has 37.6 percent of the lender, enough to block any hostile takeover attempt. (Reporting By Silvia Aloisi; Editing by Greg Mahlich) Link this Share this Digg this Email Reprints

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