Monte Paschi Rises 5% After Bad Loan Sale

Shares in Monte dei Paschi di Siena rose more than 5 per cent after the boutique fund Quaestio bought a chunk of bad loans from the bank for around €800m. Milan-based Quaestio said it had bought around 95 per cent of a tranche of €25bn non-performing loans from Monte Paschi, the Financial Times reported. The Tuscan bank is 68 per cent owned by the Italian Treasury, after a government-backed rescue last year. The deal by Quaestio’s Italian Recovery Fund underlines the slow opening up of a market in Italy’s bad loans, a breakthrough long looked for my European and Italian regulators to ease the Eurozone’s third largest economy of a significant weight on lending. The Italian banking system accounts for around a quarter of the eurozone’s stockpile of NPLs — by the far the largest in the bloc – built up during Italy’s triple dip recession and as a result of poor lending and supervisory decisions. The bad loans have weighed on banks’ profitability and the wider economy, stifling lending to new businesses. Read more. (Subscription required.)