Bentham Ventures B.V. (Bentham) is contemplating funding legal proceedings against Banca Monte dei Paschi di Siena (the Company) on behalf of shareholders who subscribed for shares as part of the rights issue conducted by the Company in June 2014 (the 2014 Rights Issue).
Subject to legal advice, the claims will assert various breaches of the rules governing the preparation and content of the prospectus for the public offering. The grounds of the proposed litigation are expected to be that the Company is liable for damages caused to the shareholders who placed reasonable faith in the truth and accuracy of information contained in the prospectus. The intention is that proceedings will be commenced in Italy.
Despite the successful 2014 Rights Issue, and the raising of €5 billion, a few months later in October 2014 the Company failed the stress test performed by the European Bank Authority (the EBA) and in fact emerged as the bank that had the largest capital shortfall (€2.1 billion) throughout Europe. The Company announced it had incurred a €5.34 billion annual loss in 2014, with €4.19 billion taken in the fourth quarter. Its market capitalisation shrunk to €2.2 billion. In May 2015, the Company returned to the market and announced a further rights issue seeking €3 billion. The EBA’s EU-wide stress test in 2016 found that the Company was the only bank in the European Union whose CET1 capital ratio was forecast to be adverse in 2018. The Company’s share price fell 80% between January – September 2016.
On 4 July 2017, the European Commission approved Italy's plan to support a precautionary recapitalisation of the Company under EU rules, on the basis of an effective restructuring plan. The impact of this plan is that junior bondholders and shareholders have contributed €4.3 billion to the Company from the conversion of junior bonds into equity and the dilution of existing shareholders.
As a consequence of these various events, shareholders who subscribed to the 2014 Rights Issue have incurred very significant losses.
Additionally, junior bondholders and existing shareholders may have further claims against the Company in relation to the circumstances leading to the 4 July action of the European Commission. Bentham may make a further statement in relation to such claims in due course following consultation with impacted parties.
Further information may be obtained by contacting us on +44 (0)20 3750 1300 or at email@example.com