* JPMorgan-led rescue plan proving difficult - sources
* Funds open to Passera plan but no commitment - sources
* No investment to be approved before Dec. 4 vote - source
(Adds details, quotes)
By Pamela Barbaglia
LONDON, Oct 7 A former Italian minister is
preparing an alternative rescue plan for Monte dei Paschi di
Siena amid signs that a 5 billion euro ($5.6 billion)
recapitalisation arranged by JPMorgan is not getting investor
support, three sources said.
Corrado Passera, who as well as being a former industry
minister served as chief executive of Intesa Sanpaolo,
is working with private equity firms including Warburg Pincus
on a plan that includes a reserved capital increase of
2.0-2.5 billion euros, the sources said.
Two of the sources said none of the funds approached by
Passera had committed to backing the plan and while they were
open to doing a deal, this was subject to due diligence. Another
source said no deal was imminent.
It is far from certain that Monte dei Paschi will turn to
Passera, who was not immediately available for comment, or that
his scheme would stand a better chance of success than
JPMorgan's, one of the sources said.
And a source close to the JPMorgan-led consortium of
investment banks said they were pressing ahead with their plan
and were confident it would succeed.
OLDEST BUT WEAKEST
The sources said private equity funds who have been working
with Passera trust his ability to turn around the Siena-based
bank, the world's oldest, which in July emerged as the weakest
lender in the latest round of European stress tests.
Monte dei Paschi's board rejected in July a last-minute
attempt by Passera to put forward a rescue plan backed by Swiss
investment bank UBS, a long-standing adviser to the
Tuscan bank. It approved instead the privately-backed rescue
arranged by JPMorgan with the help of Mediobanca.
However, the deal has since ran into trouble, senior bankers
say. A preliminary survey of investors over the summer found
scant interest in a third cash call in as many years, while
analysts have questioned the feasibility of a capital raising
that totals 10 times the bank's current market value.
Last month, Monte dei Paschi abruptly replaced chief
executive Fabrizio Viola with the head of Bank of America
Merrill Lynch in Italy, Marco Morelli, in the hope of
winning investors confidence and is now studying a
debt-to-equity conversion to cut the size of the share sale.
JPMorgan is also looking for investors to back a reserved
share sale but has yet to find any, several sources said.
Recent talks with a sovereign wealth fund fell through, one
of the sources said, raising fears the bank may need state aid.
Most foreign investors are unwilling to commit any cash
until a Dec. 4 referendum on constitutional reform that could
unseat Prime Minister Matteo Renzi's government, bankers say.
"No investment committee will ever approve a deal for Monte
dei Paschi without knowing the outcome of the Italian
referendum," an investor close to the bank said.
($1 = 0.8951 euros)
(Editing by Alexander Smith)