Italy

Banca Monte dei Paschi di Siena SpA, the bailed-out bank embroiled in a fraud probe, delayed approval of a restructuring needed to win regulator support for state aid as the authorities complete their review of the plan, Bloomberg reported. Monte Paschi’s board met yesterday and decided to postpone the approval, the bank said in a stock-exchange statement. The plan may include more asset sales, branch closings and savings than originally sought to comply with the tougher European antitrust regulator’s requirements for a 4.1 billion-euro ($5.5 billion) bailout received this year.

Air France-KLM will strengthen its role in Italian airline Alitalia SpA, Italian transport minister Maurizio Lupi said on Monday, Reuters reported. "I expect that Air France will strongly reaffirm that Alitalia is a strategic asset for Air France, and therefore that there will be a strengthening of Air France's role," Lupi said at the margins of an industry conference in Milan.

Monte dei Paschi di Siena has cancelled coupon payments on three hybrid loans coming due at the end of the month to meet European conditions for approving a €4.1 billion state bailout, the Irish Times reported. Italy’s third-biggest bank, brought close to collapse by the euro zone debt crisis, is set to unveil a turnaround plan this week after the EU told it to toughen up a previous set of restructuring measures. The new plan is already known to include a €2.5 billion share sale imposed by Brussels, more than twice the €1 billion cash call originally pencilled in by the bank.

The Italian economy shrank more than initially estimated in the second quarter as rising exports failed to offset a continued slump in consumer demand amid the longest recession since World War II, Bloomberg reported. Gross domestic product dropped 0.3 percent from the previous three months, national statistics institute Istat said in Rome. That compares with the Aug. 6 preliminary reading of a 0.2 percent contraction. Consumer spending declined 0.4 percent, with sales abroad increasing 1.2 percent.

Banca Monte dei Paschi di Siena SpA hopes to approve a new restructuring plan, which will include a €2.5 billion capital increase to be launched in 2014, within the month, The Wall Street Journal reported. The Italian bank said Monday that its board would meet on Sept. 11 to review the new plan, which is being drafted in coordination with Italy's Economy Ministry and the Bank of Italy, and aims to comply with guidelines set down by the European Commission. Monte dei Paschi di Siena said it expects its board to approve the plan by Sept. 24.

Italy and the European Commission have agreed that Banca Monte dei Paschi di Siena will have to carry out a larger-than-expected capital hike, cut costs and reduce its large government bond holdings in order to win a EU green light for state aid, officials said on Saturday. Rome has offered 4.1 billion euros of state loans to Monte Paschi, Italy's No.3 bank, in order to prop the lender, which has a weak capital position following a derivatives scandal and big Italian bond investments.

Italy's cabinet passed a package of measures to trim public spending on Monday, undeterred by a row with Silvio Berlusconi's centre-right party that is threatening to bring down the prime minister's coalition and has rattled markets, Reuters reported. The measures included cutting funding for official cars by a fifth, reducing consultancies now valued at 1.2 billion euros per year, and a decree that will gradually convert about 150,000 temporary state administration contracts into permanent ones.

The scandal-ridden bank Monte dei Paschi di Siena reported its fifth consecutive quarterly loss on Wednesday as it struggled with the cost of a state aid package and the Italian recession, the International Herald Tribune reported. However, the second-quarter net loss of €280 million, or $373 million, represented a significant improvement over the €1.6 billion loss the bank posted a year earlier.

The Bank of Italy is quietly inspecting the finances of some of the country's top lenders, which could push some Italian banks to sell assets or take other major steps, according to a central-bank document reviewed by The Wall Street Journal. The central bank's examinations, which were previously undisclosed, come against a backdrop of increasing worry among regulators, investors and bank executives about the health of some of the country's lenders amid a rise in souring loans.

Cash-strapped Seat Pagine Gialle (SPG) said on Wednesday an Italian court had admitted the Italian yellow pages publisher to a "composition with creditors" procedure, which is similar to Chapter 11 bankruptcy, Retuers reported. A meeting of creditors to give their final green light to the company's debt restructuring proposals is scheduled for Jan. 30, 2014, the company said in a statement. The board of SPG approved at the end of June a debt restructuring proposal intended to reduce its consolidated debt by about 1 billion euros ($1.3 billion).