World's oldest bank posts EUR 4.69 bn loss for 2011

(MILAN) - Italy's Banca Monte dei Paschi di Siena, the world's oldest bank, on Thursday unveiled a loss of 4.69 billion euros for 2011 due to "extraordinarily difficult" conditions after making a profit in 2010.

The bank, which was founded in 1472 and had posted a profit of 985 million euros in 2010, said in a statement it was hit by "a progressive slowdown in economic growth and an exacerbation of the sovereign debt crisis."

It said last year had seen "an abrupt increase in credit spreads and closure of interbank and institutional markets, triggering at the same time a negative spiral for both stock prices and Italian government bonds.

"This scenario strongly affected the operations of the entire banking industry and had significant repercussions on the group's balance sheet."

The earnings statement triggered a stock market fall for the bank in early trading, with its share price down 1.38 percent at 0.356 euros.

The Italian economy entered recession in the second half of last year and Prime Minister Mario Monti's is struggling to implement budget cuts and structural reforms to keep public finances in check and boost growth.

The bank said it had been forced to make "significant value adjustments due to impairment of goodwill" for a total of 4.48 billion euros in order to adapt to current market conditions and prepare for "foreseeable future scenarios."

"This reduction in value... has effects on the accounting items but has no impact on the bank's cash flow, liquidity, capital ratios, nor clearly does it have any influence on its prospective profitability and reliability," it said.

Banca Monte dei Paschi di Siena is the latest in a long series of leading banks to announce large losses for 2011. The country's leading bank, UniCredit, on Tuesday announced a loss of 9.21 billion euros for last year.