Italy bank deal in tatters

Two US private equity funds have quit talks to buy a mountain of bad loans from ailing Italian lender Monte dei Paschi di Siena, dealing a blow to plans to secure a state bailout for the bank.

Fortress and Elliott were negotiating to buy some of the €26bn in bonds that Monte dei Paschi, Italy’s fourth largest bank and the world’s oldest, must sell to private investors as a condition of the bailout.

Fortress and Elliott had backed out of the talks in a dispute over sale terms, according to sources. The loans have a face value of €26bn but the bank, brought low by years of poor lending and mismanagement, is looking to sell them for around a fifth of that.