Monte dei Paschi (BMDPY) suffered another blow on Tuesday afternoon when former Italian government minister Corrado Passera publicly revoked his alternative rescue offer, citing obstruction from bank officials.
An open letter sent to the press and the board detailed a culture of obstruction at the beleaguered Italian bank. According to the letter, Passera and his team were blocked from gaining access to the bank's books, after the bank told shareholders it would investigate Passera's plan alongside their original rescue.
The Tuscan lender has been racing to organize its third bailout in as many years as a growing pile of bad loans began to eat away at its balance sheet, contributing to the bank's implosion during European Banking Authority stress tests earlier this year.
Monte dei Paschi's original plan, crafted by JPMorgan Chase (JPM) , which it confirmed as its plan for the way forward on Oct. 25, will see the bank offload all of its €27 billion ($29.8 billion) non-performing loan portfolio into a securitization vehicle and tap institutional investors for €5 billion of new equity. Shareholders will vote on whether to approve the business plan on Nov. 24.
But Passera had offered an alternative, which he said would have brought a new investor into the bank who was willing to inject €2 billion of fresh capital.
Although further details of that rescue have never been officially released, it is reported that Passera's alternative relied heavily on increased job cuts and other reductions of operational expenditure.