Will Banca Popolare di Bari be able to recover?
Fabio Bolognini's article
Two years have passed since the writing for fun of a not very serious article on the announced transformation of the Banca Popolare di Bari (" Paranormal banking experiments ") and – as I suggested in the closing of the piece – the revision deadline has arrived to see what happened after the salvific intervention by the FITD, the State and Mediocredito Centrale.
Two years later it can be said that nothing promised and hypothesized in the hearing in the Chamber has come true. The South Bank for the South did not take off. It was January 9, 2020 when Il Fatto Quotidiano wrote:
The new industrial plan of Banca Popolare di Bari will make it possible to "strengthen" the Bari bank involved in a difficult crisis, which broke out in recent weeks with the BpB commissioner. This was stated by one of the extraordinary commissioners of the Popolare di Bari, Antonio Blandini, during a hearing before the Finance Commission of the Chamber of Deputies on the decree to rescue the Bank. This was reported by the Dire agency citing Milano Finanza .
Nonostan t and heavy sacrifices of the banking system, which is taxed through the Interbank Fund for Deposit Protection with as many as 1,170 million and the State, through Mediocredito which contributed a further 430 million (noting in May 2020 FITD share and becoming 97% shareholder), for a total of 1.6 billion hole to be covered, the miracle has not yet happened. Banca Popolare di Bari, incorporated into the Mediocredito group, is still losing, has efficiency ratios (cost / income at 155%) that do not guarantee any continuity and… it has not become the investment bank driving the development of the South as it had promised.
In September at the hearing (the financial statements are no longer public by the commissioner) he showed half-yearly 2021 accounts still with a loss and heavy adjustments on loans, as told on 30/9 always il Fatto Quotidiano :
The Popolare di Bari ditches the accounts of Mediocredito Centrale (Mcc), a company headed by Bernardo Mattarella, which reports to the Treasury Ministry through Invitalia and to which the Apulian bank on the verge of bankruptcy has been entrusted. The financial statements of the Mcc group for the first 6 months of 2021 closed with a loss of 48 million euros, compared to the 16 million profit that closed the same period of 2020. La Popolare di Bari, of which Mcc controls 97%, filed the first half of the year with a red of 101 million. The loss was partially offset by the other activities of Mediocredito which has as its primary mission the financing of production activities in the South. In particular, Mcc alone closed the six months with profits of 40 million. The group also recorded net credit risk adjustments in the half year of € 63 million, "aimed at guaranteeing levels of coverage of the credit portfolio that are more than in line with sector peers". Basically, the company has acknowledged the real value of the difficult-to-collect loans it has disbursed. Administrative expenses amounted to € 211 million, of which € 149 million relating to labor costs, including the one-off provision made by Banca Popolare di Bari, for approximately € 53 million, against participation in the early retirement incentive plan.
For a quick comparison of the results in the half-year financial statements, it can be verified that in the Popolare Bari consolidated financial statements in 2019, net commissions were 65.6 million compared to 49.3 million in 2021, halved compared to the half-year 2018. Personnel costs are indicated to 124 million against 100 million in 2019 for 2987 employees, an increase that is partly explained by the one-off costs for the redundancy fund.
And now, just before Christmas, the managerial crisis explodes with the resignation of the CEO chosen by the new shareholders, Giampiero Bergami, in probable dissent on the strategies chosen by the parent company to get out of the swamp. In the Start Magazine article of November 4, the CEO's perspective was summarized in its quotation marks:
PROJECTION ON THE END OF THE YEAR. As for the projection on the end of the year, he clarified: "We see and record a delay in the reactivation of the commercial machine, compared to the one we would have liked to take home, while on the other dynamics, those of cost, between personnel, administrative expenses and the cost of credit, for the moment the projection is in line with expectations.
COMPARISON WITH THE PARENT COMPANY MCC FOR RELAUNCH OPERATION – Bergami recalled, as "legacy as of 31 December 2020" the "very strong imbalance in terms of costs and revenues". And, he said: "Our primary task is to bring the company back into balance, in the awareness, today supported by a year of experience and knowledge of the bank, of some marked and widespread weaknesses and of the operating and business machine". The CEO then concluded that a discussion is underway “with the central parent company Mediocredito to better understand if there are structural interventions to be carried out to make this relaunch operation sustainable.
The difficulties of the relaunch plan are reflected in the article from il Giornale of 14 December which explains why the CEO raises the white flag after just over a year:
Bergami had come to the head of the Bari-based institute in October 2020 after a long career spent mainly in Monte dei Paschi and Unicredit, groups in which he had held top positions in the Corporate division. In a hearing with the Banks commission last November, Bergami reiterated how Mcc had "inherited a bank that has been away from the market for 10 years", with a cost / income ratio of 155.5 per cent and a debt of 1.5 billions of euros generated by credit losses.
The facts tell us that neither Mediocredito nor banking experts, withdrawn and grafted into the disastrous Apulian bank (not just Bergami), managed in two years to straighten the boat, nor to figure out how to do it in the future. In my opinion it was unclear from the start and even less today. All under the worried eyes of the banking unions, who previously feared drastic employee reductions and today find themselves contesting the latest managerial decisions due to the failure to relaunch and sadly beginning to think that the change will never happen ".
Carrus's choice, however, does not convince a part of the trade unions or consumer associations. Antonio Pinto, president of Confconsumatori, immediately makes it clear what are the urgent issues to be addressed: «We will ask for a meeting with the new CEO as soon as possible. We want to understand if he intends to change course in the relationship with the shareholders and if he wants to accept a serious conciliation table ".
The comment by Lando Maria Sileoni, secretary general of Fabi, the Italian Autonomous Banking Federation, is even clearer: «Carrus represents the last resort. The bank must be definitively relaunched and valued for what it deserves because it has a top quality customer base and workers who are paying financially to be able to relaunch it in some way. Even if Carrus were to fail, it is clear that the whole project of the Southern Bank, which as things stand today is almost a mirage, would be definitively shelved. There must be perfect harmony this time between Mediocredito and Popolare di Bari ». (source: La Repubblica Bari, 13 December 2021)
Summing up, the revitalization project of Popolare Bari has so far failed: still negative results, bad debts emerging from all sides, disoriented management, no aggregation of southern institutions despite greedy tax breaks put on the table by the state.
When a bank tilts because it has loaded too much water, it is almost impossible to bring it back to the waterline.
It is a new confirmation of what has always been argued by the writer: when a bank tilts because it has loaded too much water from the leaks (either the excess of NPLs or non-transparent operations on the capital) it is almost impossible to bring it back to the waterline. The weight of the devaluation of the intangible assets of trust and reputation is incalculable, which for a bank is the number 1 value. The considerations made in the circumstance of Bergami's departure by the administrator of Mediocredito Centrale Bernardo Mattarella are not too encouraging:
“Surely a complicated phase is over in which the bank needed to focus and start restructuring. A new one is opening up, oriented on our part towards an interest that is the only one we have and have always had, which is to give back to the territory a healthy, transparent reality capable of generating value for the stakeholders. This is the only lighthouse that has guided us and that will always guide us ”.
Words of circumstance that, in essence, do not open insights into how it is possible to quickly straighten that cost / income to 155%.
Let's give time to time, let's sit and observe for the good of the territory.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/banca-popolare-di-bari-riuscira-a-risollevarsi/ on Sun, 09 Jan 2022 14:48:42 +0000.