Reuters: Hot Stocks: UPDATE 1-Capital hike and voting rights plan lifts Monte Paschi

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UPDATE 1-Capital hike and voting rights plan lifts Monte Paschi Jun 14th 2013, 08:09 Fri Jun 14, 2013 4:09am EDT (Adds analyst comment, background) MILAN, June 14 (Reuters) - Expectations that Italy's Monte dei Paschi di Siena may double a planned capital increase and change its voting rights boosted the bank's shares in early trading on Friday. Monte dei Paschi shares were up by 2.8 percent at 0902 GMT, outperforming a 0.7 percent rise in the European banking index , on hopes that the moves could help the troubled bank back to health. Monte dei Paschi, at the centre of a high-profile investigation into risky derivative trades, was forced to take 4.1 billion euros in state loans, granted under the previous government of Mario Monti, to stay afloat. Sources familiar with the situation told Reuters late on Thursday that the bank's management would like to raise the limit for a planned rights issue to 2 billion euros ($2.66 billion) from 1 billion euros to enable it to start repaying the state. "If the capital hike limit were to be doubled, this would generate a hefty dilution of earnings per share. But it would allow the bank to be more effective in tackling the problem of the 'Monti-bonds'," ICBPI analyst Luca Comi said. The bank's board is also pushing ahead with plans to scrap a 4 percent cap on voting rights. In a statement late on Thursday, the bank said it will put the proposed change to shareholders at a meeting next week. Removing the voting rights ceiling would make the bank more attractive for prospective investors and help to push through a recapitalisation, analysts say. Moreover, Monte dei Paschi is due to present a new, tougher restructuring plan to the European Commission on Monday, taking into account the worsening economic environment in Italy. The revised plan is a necessary step to win the European Union's approval for the bank's state loans. ($1 = 0.7519 euros) (Reporting by Lisa Jucca; Editing by Stephen Jewkes and David Goodman) Link this Share this Digg this Email Reprints

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