Mps drama: redundancies, capital increase and scenarios (Unicredit?)
Mps thud in the stock market after the approval of the strategic plan also written by Mediobanca. All the details on the plan between capital increase, redundancies, legal buboes and forcing of the Treasury for the rescue (Unicredit?).
Mps tumbles on the Milan stock exchange after the strategic plan which provides for a capital requirement between 2 and 2.5 billion euros and 2,670 redundancies by 2025. The stock drops 3.1% to 1.05 euros.
THE MPS DRAMA
A dramatic situation that of Monte dei Paschi di Siena, which needs a capital requirement between 2 and 2.5 billion euros to cope with the lack of capital and the restructuring costs necessary to restore the income statement, which it will benefit from 2,670 net redundancies by 2025 and will return to profit in 2023, after having caught a balanced budget in 2022.
WHAT THE MPS PLAN DRAFTED WITH MEDIOBANCA SAYS
The objectives of the strategic plan of Mps, approved today by the board of directors and developed by the CEO Guido Bastianini, look far ahead, to 2025. But such far-sightedness risks being shattered – underlines Ansa – with the haste of the Treasury to exit the capital, in compliance with the commitments made with the EU, bringing the Sienese institution into the arms of Unicredit which, after the rise of Pier Carlo Padoan to the presidency and the step backwards of Jean Pierre Mustier, continues to be indicated as the port of election for Rocca Salimbeni.
THE DETAILS OF THE MPS PLAN
The strategic plan of Mps – it reads – was prepared having in mind, among other things, the commitments undertaken by the Italian Government with Brussels and at the basis of the current restructuring plan (2017-2021) as well as the Government decree of last 16 October which starts the process of divesting the stake held by the Mef (64.2%) to be carried out using market methods and also in order to consolidate the banking system. "The plan was therefore drawn up assuming strategic initiatives consistent with a substantial maintenance of the current operating model and technological infrastructure of the bank, in order not to place constraints on aggregative hypotheses". Monte dei Paschi adds that the intervention on the capital will be resolved during the next budget meeting, which will be convened by the board of directors scheduled for next January 19th. The recapitalization proposal will "adequately" take into account the definitive effects of the partial non-proportional demerger in favor of Amco (Hydra) which, as is well known, reduced the bank's assets by approximately 1 billion and "the resolutions that will be adopted in relation to the necessary capital strengthening measures that will be detailed in the context of the capital plan ".
THE MATCH BETWEEN MONTE DEI PASCHI DI SIENA AND TESORO
They are well aware of the urgency of the Treasury in Siena, where the plan was drawn up "assuming strategic initiatives consistent with a substantial maintenance of the current operating model and technological infrastructure of the bank, in order not to place constraints on aggregative hypotheses".
THE HYPOTHESIS OF BLOOMBERG ON MPS
According to Bloomberg, an MPS-Unicredit merger – with the Treasury at the helm – could be defined by March and submitted to shareholders' meetings in April, facilitated by a public 'dowry' of (others) 4-5 billion, including new capital and tax breaks.
THE ANALYSIS OF THE CORRIERE DELLA SERA
In recent weeks, the Treasury will aim to accelerate the combination of MPS with another bank, Corriere della Sera stressed : "Only in a merger that will somehow see it go out or dilute, the public shareholder (today has the 64%) may be authorized to pay other money in Mps. Of this it will now be necessary to negotiate with the DG Comp, including the dowry of an additional 2 billion in tax credit («Dta») envisaged in the maneuver ”.
WHAT IS OFFICIALLY SAYING TO THE MONTH
"No decision has been taken so far", reply from the Mef, which only confirms that "the activities necessary to implement the government's decision to sell" are underway. No comment from Unicredit, whose board of directors has ruled out operations that are harmful to its capital position.
THE OBJECTIVES OF THE MPS PLAN
To achieve its objectives, the MPS plan focuses on "industrial initiatives" capable of "rapidly creating value, with limited risks of realization". The underlying assumptions are “considered prudential”, with a GDP below pre-covid levels and rates at a standstill for at least three years. The plan will be sent to Mef, which will have to discuss it with the DG Comp, for the antitrust profiles relating to state aid.
THE ROLE OF THE ECB
In the meantime, MPS will submit the capital plan to the ECB by the end of January, which will indicate how to satisfy a capital requirement of between 2 and 2.5 billion. Resources that will serve to cover an estimated shortfall of 0.3 billion as of March 31 and 1.5 billion at the end of 2021, a year that will be impacted by restructuring costs and the effects of the pandemic on the credit portfolio.
THE WORDS OF SILEONI
"The industrial plan of Mps presented today represents only the first half of a much more complex game – remarked the leader of Fabi, Lando Sileoni – in which the desire, the intention and the determination of the 'interested parties' will affect the decisions already taken by the European Central Bank and the European Commission ”, both aligned for a merger with Unicredit.
THE LEGAL BUBBY OF MPS
A complication in a merger with Mps are the legal risks for about 10 billion, more than half linked to the claims for damages of the former shareholders for the Alexandria and Santorini operations, Corriere della Sera recalled: "The conviction of the former top management Alessandro Fabrizio Viola aggravated the risk situation for Mps, which set aside a further 400 million. For this reason, the Treasury is looking for ways to segregate legal risks, with some sort of insurance (with Fintecna or Amco) or a contribution ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/dramma-mps-esuberi-aumento-di-capitale-e-scenari-unicredit/ on Fri, 18 Dec 2020 11:26:19 +0000.