View source for Monte Dei Paschi Shareholders Approve Bad Loan Clean-up

<br>MILAN, Oct 4 (Reuters) - Shareholders in Monte dei Paschi di Siena approved on Sunday a long-awaited bad loan clean-up plan aimed at easing the sale of the state-owned bank to a healthier rival.<br> <br>Italy has worked for two years on the plan, which gained final approval from the European Central Bank in September and must be completed by Dec.<br><br>1.<br> <br>Rome bailed out Monte dei Paschi in 2017, [https://www.dictionary.com/browse/acquiring acquiring] a 68% stake for 5.4 billion euros ($6.3 billion). To meet conditions agreed at the time with European Union competition authorities, it must cut that stake before the bank approves 2021 earnings.<br> <br>The 'Hydra' scheme approved on Sunday at an extraordinary shareholders' meeting will lower Monte dei Paschi's impaired loans to 4.3% of total lending, below UniCredit's 4.8%,  [https://hydraclubbioknikokex7njhwuahc2l67lfiz7z36md2jvopda7hidra-onion.com hydraclubbioknikokex7njhwuahc2l67lfiz7z36md2jvopda7nchid.onion] currently the best level among larger commercial banks.<br> <br>The move was designed to facilitate a merger, but the Treasury is struggling to find buyers for the loss-making bank, people familiar with the matter have said.<br> <br>Under the 'Hydra' scheme Monte dei Paschi will transfer 8.1 billion euros in impaired loans to state-owned bad loan manager AMCO, together with other assets and liabilities including 1.1 billion euros in capital.<br> <br>The deal, which includes a 3.2 billion euro bridge loan by banks UBS and JPMorgan, allowed Monte dei Paschi to shed the loans without incurring losses.<br> <br>However, the ECB has demanded the bank replenishes its capital buffers, a condition the Treasury had hoped to fulfil by finding a buyer by the end of the year.<br> <br>Clinching such a deal, however, will require more time as incentives to lure potential buyers will have to be negotiated, sources have said.<br> <br>The ruling 5-Star Movement has been calling for the state to hold onto MPS and Prime Minister Giuseppe Conte is yet to sign a decree needed to complete the bad loan spin-off.<br><br>($1 = 0.8537 euros) (Reporting by Valentina Za and Giuseppe Fonte; Editing by Crispian Balmer)<br>