SIENA, Italy (Reuters) - The top shareholder in Monte dei Paschi dei Siena (MIL:BMPS) is open to the idea of a merger of the troubled Italian bank with another financial group, preferably "of an international standing", it said in a document approved by its board this week and seen by Reuters.
The comment is a major strategic shift for the Monte Paschi foundation, a not-for-profit body with close ties to local politicians which now has a 33.5 percent stake in the world's oldest bank after being forced to sell down its majority holding to pay off its debts.
The bank in turn risks nationalisation unless it can persuade private investors to buy into a 2.5 billion-euro ($3.4 billion) share issue next year.
Its share price was up 6 percent at 0.2316 euros by 1542 GMT on Thursday after the news.
The cash-strapped foundation, which has its Monte dei Paschi stake valued at 0.24 euros per share in its books, is seeking to reduce its holding in the bank to pay back 350 million euros of debts and has already said it will not take part in the capital increase.
In the document, dated October 15 and setting out its strategic priorities through 2017, the foundation said it did not want to sell its stake "in dribs and drabs". At current market prices it would have to sell a stake of nearly 15 percent to fully repay its debts.
It said among the options it was considering were selling on the market or to one or more investors. It also mentioned the possibility of "extraordinary operations, such as a merger (of the bank) with other financial groups, preferably of international standing."
Banking sources say the foundation must find a buyer for a big chunk of its stake quickly, because the looming share issue could put pressure on the price.
The foundation declined to comment.
(Reporting by Silvia Ognibene; Writing by Silvia Aloisi; Editing by Greg Mahlich)