Mps: how the Treasury’s move went and what will happen now
The Ministry of Economy, which controls MPS, has put 25% of the bank's capital on the market at a price of 2.92 euros with a discount of 4.9% compared to last night's closing. The central objectives and scenarios. Giuseppe Liturri's point
It was a real blitz that was announced and closed in a few hours yesterday evening by the Ministry of Economy on the capital of Banca MPS. The consortium of banks responsible for the placement with institutional investors (banks, funds ) completed the task received from the offices of the minister Giancarlo Giorgetti and 25% of the MPS capital changed hands at the price of 2.92 euros with a discount by 4.9% compared to last night's closing, but significantly higher than the price of 2.82 which the stock is recording today.
920 million will thus flow into the coffers of via XX Settembre who will in any case remain a major shareholder of the bank with 39% of the capital (from 64% pre-placement).
By explicit agreement with the placing banks, the Treasury will not be able to carry out other capital operations for the next 90 days.
THE TRANSIENTITY OF PUBLIC INVESTMENT IN MPS
It must be said that this is the first step along a path that should take the Treasury completely out of the capital of the Sienese bank , because the EU Commission, when in 2017 it authorized the precautionary recapitalization by the ministry then led by Pier Carlo Padoan, placed the the explicit condition of the transitory nature of public investment. However, a deadline has been extended several times because in the past a market operation under acceptable conditions has always been objectively impracticable. And this is certainly a positive signal towards the Commission: it is sold if and when the operation is convenient for the State, not when the deadlines written by Brussels require it.
The "lightning" manner in which the operation took place was also appreciable. Making us forget the harmful chatter of a few months ago which only favored potential buyers, who were counting on the government's obligation to sell. These operations are not announced weeks in advance, they are just carried out.
Yesterday, in the wake of the satisfactory economic results of the last quarter, those conditions were met and Giorgetti moved on to cash in. Furthermore, realizing a decent capital gain at least compared to the book value (€2) of the latest capital increase of 2.5 billion.
DOUBTS ABOUT THE FUTURE
Now doubts arise about the future. The myth of the bank's "contestability" does not appear to have aroused excessive enthusiasm on the markets (and today's fall in prices is provisional proof of this), because 39% of the State is still very cumbersome and no one wants to invest huge sums to make Giorgetti's minority shareholder. Banks potentially interested in a merger are in a prudent waiting position.
From the Treasury's point of view, reflection is needed on the opportunity to continue on the path just undertaken. The bank has just regained reasonable profitability and the assets that yield must be sold also considering the losses in the flow of annual income that would arrive from the respective balance sheets. Selling an asset that produces profits, and quickly, is something that is only done in liquidations. And we allow ourselves to believe that the Italian Republic is not in those conditions, whatever the Commission's thoughts. So now, calm down and chalk it up and start doing the convenience calculations, without any rush.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/mps-come-e-andata-la-mossa-del-tesoro-e-cosa-succedera-ora/ on Tue, 21 Nov 2023 14:52:18 +0000.