All the legal bombs in the accounts of Mps
The point about Mps. The article by Emanuela Rossi
There is a bomb in Siena ready to explode: it is the petitum or the claims for damages that have reached Montepaschi over the years and which could partly materialize after the conviction of the former leaders Alessandro Profumo and Fabrizio Viola by the Court of Milan in the process on the alleged irregularities in the accounting of financial statements in the period between 2012 and the first half of 2015 and for false communications only for the last half of 2015. All while the government in recent days has signed the decree with which it undertakes to release the Treasury, the largest shareholder with 68% since 2017, of the bank's capital by spring 2022. The issue of disputes, one can bet, will be addressed by the board of directors on the agenda for November 5th.
THE JUDGMENT AGAINST PERFUME AND PURPLE
With the sentence last week, therefore, the former president of Monte di Paschi di Siena, and current CEO of Leonardo, Alessandro Profumo, and the former CEO of MPS, Fabrizio Viola, were sentenced to 6 years of imprisonment, to a fine of 2.5 million each, to the compensation of the civil parties admitted, to the ban from public offices for 5 years and from managerial positions in companies for 2 years. The sentence is instead equal to three years and six months for the former president of the board of statutory auditors, Paolo Salvadori. "The conviction – as Repubblica pointed out – is for having represented the Alexandria and Santorini corporate vehicles in Mps accounts as portfolios of billionaire government bonds, while those BTPs were only as collateral for derivatives with which Mps insured counterparties from the default of Italy Nomura and Deutsche Bank; all with an 'exchange' between the two rates which is very harmful for MPS ”. This is a practice started by the previous management, that of Giuseppe Mussari and Antonio Vigni, "to turn to the two business banks Mps losses of 2008 and that the managers who have come to replace them, with the comfort of Consob and Bankitalia, have not re-accounted, holding a mine in the bank's accounts which months later (2016) asked for 5 billion in capital increase from shareholders ".
HOW MUCH DOES THE PETITUM AMOUNT ?
It must be said that in the accounts of Rocca Salimbeni lie 2 billion euros of claims for damages relating to the Profumo-Viola management between 2012 and 2015 which could now materialize and end up in the pockets of 4 thousand civil parties of savers, including the association "Government of Siena".
However, this is only a fifth of the disputes pending over Montepaschi's head because at 30 June last, as asserted a few weeks ago by CEO Guido Bastianini during the hearing in the bicameral commission of inquiry on the banking and financial system, the total exceeded the 10 billion.
In particular, for “probable” disputes, the requests were equal to 6.6 billion, for the “possible” ones equal to 2.2 billion and for the “remote” ones equal to 1.4 billion. In the first case, the provisions were 26% of the sums requested and constituted approximately two thirds of all the provisions for disputes. As emerges from the presentation of the half-yearly report, however, no resources had been set aside for the approximately 2.2 billion in claims for damages caused by the Profumo-Viola management as "the bank considers the damage unlikely". At this point, according to Repubblica , "a bevy of lawyers and consultants are already working to produce a provision estimate that is consistent and at the same time sustainable for the bank's fragile assets for months".
At the hearing, the manager retraced the stages of the main criminal proceedings concerning Mps: between 2008 and 2011 criminal cases mostly related to the acquisition of Antonveneta, in 2012 the start of the investigation by the Public Prosecutor of Siena for false accounting and market manipulations inherent in the 2009-2012 financial statements (Alexandria and Santorini transactions), in November 2015 the indictment by the Milan Public Prosecutor's Office for Mussari, Baldassarri and Vigni, sentenced in first instance in November 2019.
Also during the hearing Bastianini has noted that as at 31 March 2020, the bank was facing "108 disputes brought by individuals who have invested in subordinated bonds issued by the institute, for a total claim of approximately 47 million euro. This dispute is for the most part related to investments in Lower Tier II bonds, and the plaintiffs are mostly subjects who have undergone a legal conversion of their securities into ordinary shares ”.
The CEO then returned to the 3.8 billion euro damage request from the MPS Foundation, which arrived last August after the initiative of the mayor of Siena, Luigi De Mossi, and considered "inappropriate for a thousand reasons" like others such operations. This is a request “which refers to events of ten to twelve years ago, I would have hoped it would not arrive, it arrived at the half-year and we have described it in as much detail as possible” in the half-year report. However, he concluded, "we consider it a cause on which we have excellent arguments to counter their requests", he stressed, hoping that "there are no economic impacts for the bank".
Bastianini's words were commented by the chairman of the bicameral commission, Carla Ruocco (M5S), according to whom we can see "lights and shadows in the management of the bank" and are "serious questions about the bankruptcy management of the then private bank, about the professionalism of the management of the same bank, on the mere respect of the form to the detriment of the substance, on the necessary remedial intervention of the State and on the role that the same must have once the public resources have been used and perhaps, also, in the supervision of the intermediary itself ".
THE DECREE FOR THE SALE OF NPLs
The provision, which according to Il Sole 24 Ore was already ready at the beginning of September and which in recent days had completed the technical steps to the Ministry of Economic Development, authorizes the split of 8.1 billion of impaired loans to Amco, the former sga, and proposes three avenues for the privatization of the credit institution: the merger with another bank, the offer of the Treasury share package, the tender. In the direction of the first possibility, the appointment as president of Unicredit of Pier Carlo Padoan, minister in Via XX Settembre at the time of the negotiations with Brussels, Frankfurt and Vigilanza that led to the recapitalization of Mps, seemed particularly useful.
Meanwhile, the next appointment is the issuance of an additional Tier 1 bond of 700 million which must be purchased by individuals for at least 30%.
Bastianini also spoke about the sale of impaired loans to Amco in a hearing in the commission chaired by Ruocco, underlining that the Hydra operation allows Siena "to face the current economic crisis with a more solid position, to return to generate capital in the medium term and to be able to attract new investors ". In short, "it constitutes a fundamental opportunity for Mps to significantly reduce the credit risk of the group".
On the occasion, the CEO recalled that the reduction in equity related to the transaction was reduced from 1.1 billion to 960 million and that thanks to the spin-off of NPL Mps is in line with the best standards of the Italian market for credit risk gross npl ratio of 4% in June 2020. During his speech Bastianini also highlighted the conditions precedent including the ceiling of 150 million for the payment of shares to shareholders who will exercise the withdrawal.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutte-le-bombe-legali-nei-conti-di-mps/ on Mon, 26 Oct 2020 06:27:12 +0000.