Yahoo Finance Monte dei Paschi shares drop on reports of new probe into Italy bailout conditions
Investing.com -- Shares in Banca Monte dei Paschi di Siena (BIT:BMPS) slumped by more than 7% on Wednesday on media reports that a judge has asked prosecutors in Milan to investigate allegations of fraud surrounding the lender's 2017 rescue.
According to documents reviewed by Reuters, the judge has told public prosecutors to look into whether the Tuscan bank had utilized false accounting methods to conceal that it was "not solvent, which would have prevented the state bailout." The allegations say that the bank misclassified some impaired loans as performing.
In 2017, Italy used a so-called precautionary recapitalization process, which, under European Union law, places losses on Monte dei Paschi's junior bondholders, to shovel 5.4 billion euros into Monte dei Paschi.
The announcement comes as the Italian government looks to offload its holding in the company following a more than 45% surge in its shares so far this year.
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