ROME – “Monte dei Paschi di Siena is a restored bank but remains a prisoner of uncertainty. The DG Comp has not yet dissolved the reserve on the 2021-2025 strategic plan and on capital strengthening. Furthermore, a solution to the problem of legal risks has not been found ”.
This is the result of the analysis conducted by the First Cisl Research Department on the 2021–2025 industrial plan which underlines how “the quality of assets is among the highest in the sector and operating costs have been drastically reduced, indeed excessively. The strategic plan, heavily conditioned by the DG Comp, is characterized by a lower incidence of the interest margin on revenues and an increase in commissions. A further reduction in operating costs is expected, leading to new cuts in employment and branches.
The opportunities to be seized Private investments resulting from the implementation of the NRP offer the possibility of recovering market shares in loans to customers (which fell from 6.6% in 2016 to 4.88% in 2020), especially towards small businesses. Therefore, the project of the internal consumer credit factory goes in the right direction. The reduced incidence of NPLs, in particular non-performing loans, the improved coverage of the same and the maintenance of the flows of new impaired loans at low levels, can greatly reduce the incidence of write-downs on loans, bringing the income statement into positive first quarter 2021. From 2016 to 2020 there was a reduction in employment (-16%) double compared to the system data and the average cost per employee (equal to 69,000 euros) is significantly lower than that of the most direct competitors (76,000 euro for Banco Bpm, 78,000 euro Ubi and 75,000 euro Bper). The cut in operating costs prevented the achievement of revenue targets, which fell by 32%. According to the plan, they should instead have remained at the same level as in 2016 (4.27 billion by 2021). This proves that indiscriminate cost cutting activates a vicious cycle of revenue reduction.
Less credit, more commissions: the wrong path In the plan, customer receivables are expected to continuously decrease. The net loans per employee indicator (equal to € 3.9 million) presents a significant gap compared to competitors (the average figure for Banco Bpm, Ubi and Bper is equal to € 4.4 million – 2020 financial statements data) . It should be taken into account that the interest margin of retail banking between 2016 and 2020 has undergone a reduction of more than 60%. The plan, on the other hand, focuses on an unsustainable increase in commissions deriving from overperformance in managed savings. All in a context of further branch closures and staff reductions. The hypothesis would be to reach a commission / interest margin ratio of 128% in 2023 starting from 111% in 2020. Prometeia’s forecasts relating to the banking system indicate a condition of greater sustainability: the commission / interest margin ratio would pass from ‘81% in 2020 to 86% in 2023.
“Mps is paying too high a price for the delays of the DG Comp: it is not possible to wait until the end of the year to proceed with the capital strengthening – says the secretary general of First Cisl Riccardo Colombani – The bank needs capital to provide credit to businesses, the only way to sustainable revenue growth. It is also of fundamental importance to solve the problem of legal risks in order to free up assets to increase loans and consequently the interest margin. A political solution is needed on this point. The amount of litigation makes privatization impracticable. The design of the stew would end up dismembering and ending the history of the oldest bank in the world. The obligatory path – concludes Colombani – is that of relaunching, also to enhance the public resources invested so far. Otherwise the logic of bailout would prevail with a perverse spiral of further reduction in employment, less support for the economy and a strong devaluation of public investment ”.