What will Draghi do on Mps
All the latest news on Mps between facts, numbers and unknowns, while Reuters writes that Draghi would like to privatize Monte by respecting the commitments made by the Treasury with Brussels
Mps believes it can overcome the equity shortfall "through the 'structural solution'", represented by an aggregation with another bank "or through a capital strengthening" of 2.5 billion euros "at market conditions and with the participation pro-quota of the State ".
This is what the bank affirms in the note on the approval of the financial statements, in which it accounts for “significant uncertainties” on the path to capital strengthening linked to the authorizations of the DG Comp.
THE DRAFT BUDGET OF MPS
The Board of Mps yesterday approved the draft financial statements with a view to business continuity despite the "significant uncertainties" that hover over the Sienese institution, linked to the authorization that the Italian State needs from the EU Antitrust to cover the recapitalization that the bank has undertaken to launch should it not merge with a more solid institution.
THE NOTE OF MPS
Without a "structural solution", that is a merger with a more solid institution, the capital plan submitted to the ECB – recalls Mps – provides for a capital increase of 2.5 billion euros "at market conditions and with pro-quota participation of the Italian State ".
WHAT WILL BRUSSELS DO ON MPS?
In this context, the DG Comp should authorize the intervention of the State "on the basis of the stand alone viability (solvency on an autonomous basis, ed)" of Mps. But this assessment, warns Mps, is “still ongoing” and “poses, in principle, significant uncertainties on the Bank's capital strengthening process and on the capital increase at market conditions”.
THE RISKS OF MPS
In order to convince the EU, Siena "has also presented additional compensation measures with respect to those already included in the 2021-2025 industrial plan" and which should result in further cuts compared to the approximately 2700 redundancies envisaged in the plan. At the same time, the bank continues “in its initiatives aimed at reducing corporate risks, actively operating in order to reduce legal risks”, after having reduced the NPLs to the “lowest levels” of the system.
WHAT MPS SAYS
"In light of these elements – continues Mps – it is believed that the shortfall (deficiency, ed) asset may be passed through the 'structural solution' or through a capital strengthening" with the intervention of the state. Now it will be a question to see to what extent and with what clarifications the board's assessments are shared by the reviewers.
PRIVATIZER DRAGONS
But what will the new executive do? The government led by Mario Draghi has no doubts: the privatization of Banca Monte dei Paschi di Siena will take place. And the outflow of the state in the capital of MPS should take place by the end of the year, based on the agreements made in 2017 with the EU Commission as part of the rescue.
THE MPS KNOT FOR TREASURE
This is the information filtered by the Ministry of Economy, where the MPS dossier has already arrived in the hands of Minister Daniele Franco. As reported by Reuters, the option to respect the deadlines agreed with the European Union would avoid draining the resources of the Italian taxpayer more. Despite the brakes of the grillini, even the previous government had still tried to respect the schedule. So much so that before Christmas the Treasury had already tried to define the promised dowry to the potential buyer. Now, the possible guarantee on the dispute is also being studied.
THE ADVISORS AT WORK
The knots to be solved for the executive are different. The advisors working on the dossier ( Mediobanca , Credit Suisse, Bank of America and the Orrick law firm) are trying to find the solution that can have less impact on the state coffers, or that neutralizes the legal risk as much as possible. One possible solution would be to involve a pool of companies that can provide insurance coverage. Furthermore, the prize could be shared between the State and Monte dei Paschi di Siena.
STATE AID?
Surely that of the premium is the thorniest issue, writes Bluerating: “The risk that the State aid dispute could be triggered, if the definition of the conditions falls below certain thresholds, is real. But the project will also have to undergo scrutiny by the EU Commission of the Competition Directorate in Brussels ”.
THE SCENARIOS FOR MPS
Finally, it remains to identify the possible buyer. Other funds such as Blackstone and Lonestar, and especially some banks, could enter the negotiation. Among the latter certainly Banco Bpm and Bper, although other opportunities could end up on the radar of their two CEOs Giuseppe Castagna and Alessandro Vandelli. French banks operating in Italy could also look out on the dossier. However, few are betting on a return of interest from Bnp Paribas, after the approach of 2005, and on a distraction from Crédit Agricole's commitment to the Valtellina credit.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-fara-draghi-su-mps/ on Fri, 26 Feb 2021 10:26:54 +0000.