Italy Unicredit Set To Scrub Talks Over Ailing Monte Dei Paschi

Italy's government and UniCredit are preparing to call off negotiations over ailing bank Monte dei Paschi (MPS) after efforts to reach an agreement over a costly recapitalization plan fell through, two sources told Pamela Barbaglia, Valentina Za, and Giuseppe Fonte of Reuters.

Photo Insert: Monte dei Paschi

Rome has decided it won't be able to meet UniCredit's requests for a recapitalization package worth more than 7 billion euros as this would make a deal "too punitive" for the Italian taxpayer, one of the sources said.

Disagreements over the size and costs of job cuts at the world's oldest bank as well as an accountability issue over the way UniCredit calculates the fair value adjustments on MPS liabilities have proved to be the main stumbling block, this source said.

A second source said the parties had concluded it was impossible to reach an agreement based on the conditions set in July, which required the acquisition of "selected parts" of Monte dei Paschi to boost UniCredit's earnings per share by 10% and leave its capital unaffected.

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