Mps, the 8.5 billion dollar “dowry” blows up the second pole

Mps, the 8.5 billion dollar “dowry” blows up the second pole
Mps, the 8.5 billion dollar “dowry” blows up the second pole

That the Ministry of Economy has risen from the table on the Montepaschi was the inevitable conclusion of the conditions set at the beginning of August by Minister Daniele Franco in the Senate: lsale to Unicredit it had to be done not at all costs but at market conditions. And as long as the contribution was around 5 billion, the solution seemed possible. When the bar went up to 8.5 billion, the Ministry of Economy took note of not being able to move forward. The project to create a second banking center around Unicredit fades, now leaving two banks on the table looking for a future.

The numbers squadernato by Andrea Orcel to the Treasury negotiators, with the director general Alessandro Rivera in the lead, they no longer configured a market operation: Unicredit asked the state to subscribe a 6.3 billion euro capital increase for the entire Mps; if to this figure – much higher than the maximum ceiling that the Treasury had set – we add 2.2 billion in tax credits (the so-called “Dta”), we arrive at a total commitment of 8.5 billion euro public. Funds that the Treasury should have used to rescue a bank, not just any one but Montepaschi, whose history has long been closely intertwined with politics. Siena therefore remains in the belly of the Treasury, shareholder with 64%.

During the negotiation, numbers and scenarios have changed several times, without ever finding a square. Among the various nodes, for example, that of the enhancement of the business branch identified by Unicredit: the Orcel team valued it 1.3 billion, against an estimated profitability of 600 million per year. In just over two years, the acquisition would have paid off in full. In short – the reasoning that can be grasped in environments close to the MEF – not only was it not a question of market conditions that were of interest to all the shareholders of MPS, but in fact it would have been a maxi-state aid to Unicredit.
From the front of the Milanese bank, the line is reiterated: The conditions – no acquisition costs, profit growth, selected perimeter and no lawsuits – were clear from the start. The institute of Piazza Gae Aulenti will continue on its way. If there is any other operation that allows growth to be accelerated, – as Orcel has always said – it will be done. In recent months, there have been rumors of interest for Banco Bpm on the market. However, the value of Unicredit shares would make a merger with share swap less convenient at this time.

For Siena, no short-term solutions seem to emerge. Movements by Banco Bpm in the direction of Via XX Settembre have been reported – the Milanese bank denied meetings at the Mef – but the hypothesis of an intervention on Siena is not considered viable due to a question of size. One possibility could be Unipol. But more than in a Bper key, controlled by the Bolognese company, the interest ofmanaging director Carlo Cimbri it could be due to a possible direct role of Unipol itself in a bancassurance transaction. Other options are not seen. At least among the national banks. The situation is different if you look outside. Not only at Credit Agricole or Bnp Paribas, which are already well established. The BBVA, for example, which has just launched its home banking platform in Italy, would not be disinterested. But the option of selling MPS to a foreign bank seems impractical, especially for the management of social repercussions. One of the unresolved issues on the table with Unicredit was related to about 8,000 redundancies in Siena.

The Treasury remains doubtful whether Orcel’s was a tactical negotiating position or a strategy to be able to collapse the table without repercussions. It is clear that under those conditions, it is less expensive for the Treasury to make a stand-alone capital increase. How much, I will negotiate with the Competition Department (DG Comp) headed by Margrethe Vestager. The confrontation will start in the next few days. The Treasury will ask for an extension of the December 2021 deadline to privatize MPS. How much? The technical times for a capital increase are long. It will not therefore be six months, but perhaps not even two years. The time needed to strengthen the bank and initiate the compensatory remedies that the DGComp will ask for, probably more redundancies and branch cuts. However, the macroeconomic situation helps Mps: with GDP rising by 6% and a prospect of a rise in interest rates, the bank will be able to earn more easily.
However, the work done will not be wasted, underline sources close to via XX Settembre. Mps’s non-performing loans could pass to Amco and the cleanup of lawsuits will also continue.


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