(Adds details on advisers, fees, possible bidders)
ROME/LONDON/MILAN, Nov 21 (Reuters) - Italy's Treasury has
picked Bank of America and Orrick as financial and legal
advisers to secure a merger deal for bailed-out bank Monte dei
Paschi (MPS) as part of its privatisation plan, four sources
close to the matter told Reuters.
Rome aims to clinch a merger with a healthier peer in 2021,
the sources said, to provide a long-term solution for the bank,
which has been backed by the government since 2017 following an
8 billion euro ($9.5 billion) rescue deal.
The mandates, which will last 12 months, will see Bank of
America's co-head of the financial institution group, Giorgio
Cocini, and Orrick's partners Patrizio Messina and Marco
Nicolini working closely with the Treasury to attract buyers and
address the bank's capital shortfalls.
Rome is expected to pay about 150,000 euros in financial and
legal fees, with the lion's share going to Bank of America, the
Italy's Treasury and Orrick were not immediately available
for comment, while Bank of America declined to comment.
Dogged by legal claims and poor quality assets, MPS is a
tough sell in Italy's banking market, which has a surplus of
branches and has seen a rise in loan losses and remote banking
in the COVID-19 pandemic.
UniCredit is seen as the preferred buyer for the
548-year old bank given its robust balance sheet, sources have
said, despite boss Jean Pierre Mustier ruling out mergers which,
he has said, only add "branches and staff."
Italy's third-largest bank, Banco BPM, is in the
process of exploring possible tie-ups and may also emerge as a
viable bidder for MPS, one of the sources said.
Banco BPM has also repeatedly denied any interest for MPS.
Any deal for the Tuscan bank would only come after the
Treasury acts to remove legal claims amounting to 10 billion
euros, while also injecting fresh capital.
Rome has set aside 1.5 billion euros to shore up MPS but the
bank faces a shortfall of at least 2 billion, sources have said.
Its capital buffers are set to fall below minimum
requirements early next year, hit by the cost of a bad loan
clean-up it is about to complete as well as provisions against
legal risks following the conviction of former top executives.
($1 = 0.8437 euros)
(Reporting by Giuseppe Fonte, Pamela Barbaglia and Valentina
Za; Editing by Mark Potter)