Shares of Monte dei Paschi are surging higher by 5% in Italy on a report that said JP Morgan was set to lend close to $8b to Italian authorities in order to buy up toxic assets from the bedraggled Italian lender.
Naturally, Dimon will be lending into a vehicle that is buying the better toxic assets, ones backed by the state.
In an unsourced report, Il Messaggero said Monte dei Paschi was expected to sell 26.6 billion euros in bad loans to the vehicle that would finance the purchase by selling bonds backed by the non-performing loans.
Italian bank rescue fund Atlante will buy the riskier portion of the new bonds while the senior tranche, worth 7 billion euros, would benefit from a state-backed guarantee that requires 4-6 months to be provided.
The loan by JP Morgan would allow the transaction to proceed while the issuance of the asset-backed notes is arranged.
JP Morgan and Monte dei Paschi declined to comment.
Can’t lose.
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Indeed the game does go on.