by Eric J. Lyman
ROME, Oct.17 (Xinhua) -- Italy's ailing bank Monte dei Paschi di Siena will return to the Italian Stock Exchange after a months-long hiatus.
Founded in 1472, the bank remains Italy's third largest one in terms of assets. But years of bad investments, unwise loans, the economic crisis, and internal leadership issues left the bank on the verge of collapse.
Last year, Monte dei Paschi di Siena was the only one among 51 large European financial institutions to earn the lowest rating on a European Union bank stress test, and the fourth government bailout plan in five years was unveiled. In December, the bank's shares were removed from the Italian Stock Exchange in Milan.
Now, they are set to return at some point before the end of the month in a move one analyst told Xinhua represented "a sign of new life," from the troubled institution.
"Returning to the stock market is first of all good news for the bank's shareholders because for the first time this year their shares will be liquid," Ruggero Bertelli, a banking professor at the University of Siena, the city where the bank is based, said in an interview. "But for everyone else, it is a sign of new life for an institution that had been on the brink of collapse."
The technical side of Monte dei Paschi's return to the stock market is still being worked out. Bank officials are finalizing the terms of the bank's new prospectus, which must be approved by securities regulator CONSOB before the shares can be traded. They are expected to finalize the document by Friday, and if that happens, shares could start being traded as soon as Oct. 23, the following Monday.
It is still not clear what the opening price for Monte dei Paschi shares will be. After a reverse stock split last year -- 100 of the bank's old shares became one new share -- the shares steadily slipped from a high of what would have been 34.70 euros (41.65 U.S. dollars) per share about one year ago to a low of 15.08 euros (18.10 U.S. dollars) on Dec. 22, when they were suspended. In 2016 alone, the bank's shares lost 87 percent of their value.
According to Marina Brogi, an economist specializing in financial markets at Rome's La Sapienza University, the new price is likely to be higher than they were when the shares were suspended last year.
"The new price will of course be set by supply in demand, but we cannot forget that the final price last year was from when the future of the bank was in doubt," Brogi told Xinhua. "Now, after government bailout money, bad loans have been separated, and with a restructuring plan in place, Monte dei Paschi has to be seen as less of a risk."
But most agree Monte dei Paschi is far from out of the woods. Both Bertelli and Brogi said the bank has a lot of work to prove it has a strategy that can return it to profitability, and on Tuesday, the U.S. ratings firm Moody's issued a negative outlook to the Italian banking sector as a whole, siting Monte dei Paschi as one of the sector's weak points.
