Italy's Monte dei Paschi reduced legal risk to 4.9 bn

The logo of Monte dei Paschi di Rome is shown in a bank entrance in Siena Bank.

The Italy's Banca Monte dei Paschi di Siena has further reduced its legal claims to 4.9 billion euros, a slide on the Tuscan bank's website showed, marking another step in Rome's efforts to reprivatize the ailing lender.

MPS initially faced some 10 billion euros in legal risks, seen as one of the main hurdles to the Italian Treasury's plans to cut its stake in the bank by mid-2019, as agreed as part of a state bailout in 2017.

On Thursday, MPS Board approved a settlement agreement with the bank's top investor, local banking foundation Fondazione Monte dei Paschi, which reduces the risks by 3.8 billion euros.

According to the slide, Monte dei Paschi's legal risks stood at 4.9 billion euros as of June 30th of which 2.2 billion euros were booked and for whom provisions of 1 billion euros had been classified as probable.

The Treasury has been working to offload MPS to healthier rival UniCredit and the parties agreed to enter exclusive talks over the bailed out bank last week.

Under the terms by UniCredit to stop negotiations, MPS will be shielded from any non-ordinary legal risks weighing on the Milanese banks after years of mismanagement.

Reuters reported that the Treasury was working to more than halve MPS' legal risks.