Siena MPS bank closes third quarter with unexpected losses

Bank books a loss of more than 47 million euros

Siena MPS bank closes third quarter with unexpected losses

Rome, November 14 - Italy's third-biggest bank, Banca Monte dei Paschi di Siena (MPS), on Wednesday reported a third-quarter loss blamed on higher provisions for bad loans. The troubled Siena-based bank reported an unexpected net loss of 47.4 million euros in the period ending September 30, compared with a profit of 42.2 million euros during the same period last year. It explained the loss, saying that provisions for bad loans more than offset the revenues it took in from a securities buyback and a rebound in Italian government debt. In the first nine months of the year, write-downs on bad loans totalled 1.3 billion euros, a 56% jump from one year earlier. Paschi, the world's oldest active bank, increased its loan-loss provisions to 461 million euros in the third quarter from 269 million euros in the same period last year. The bank also reported that its Tier 1 capital ratio, a key measure of financial health, dropped to 11.4% on September 30 from 11.7% at the end of June. Paschi is the only Italian bank - and one of only four lenders in Europe - that has failed to meet tough new capital requirements set by the European Banking Authority. Paschi has been shedding assets, cutting costs, and attempting to reduce risks as part of a three-year plan to restore liquidity. The bank reported that third-quarter revenues rose by an annualized 5% to 1.38 billion euros in the third quarter as the bank made a profit of 233 million euros from trading, an improvement from losses of 4 million euros a year ago. Last month, Moody's investment agency lowered Paschi's rating to junk status, arguing the bank's "fragile asset quality" made it highly reliant on European Central Bank assistance.

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