For Mps, darkness is again full on the Stock Exchange, the only possibility is maxi-transfer Npl to unlock M&A scenarios


MPS out of the chorus of the rises of the banks of Piazza Affari. After the decline on Wednesday (-2.88%) following the quarterly accounts, even today the stock closed in red (-0.33%) when the rest of the banks ran with many securities to update the annual maximums. In the last two months, the stock moved sideways while the banks ringed double-digit increases. And the balance since the beginning of the year is still sadly in the red (-0.9%).
The numbers of Mps have not warmed the market despite the profit slightly better than expected. Equita today confirmed the hold recommendation on Banca MPS and in the short term sees the only upside on the stock linked to the outcome of the negotiations with the EU on the sale of the NPE, whose outcome could cascade to unlock speculative scenarios.

After accounts the spotlight shifts to cession Npl, EU needs ok

Meanwhile, within a few weeks, the European Union should rule on the plan sale to Amco, ex SGA, of a relevant NPL portfolio of Mps. THE'managing director of Mps, Marco Morelli, has fueled expectations for an imminent agreement to further clean up the bank from impaired loans. "There is a discussion going on that has been going on for a while and I hope that in a few weeks we will be able to have more clarity," the CEO said on the sidelines of the presentation of quarterly accounts.

The question concerns the negotiation in progress between the Treasury, the main shareholder of Banca MPS with 68% of the capital, and the European Commission, to free the Sienese bank of most of its non-performing loans, a portfolio of around 10-14 billion euros, all without breaking the EU competition rules. "Based on our calculations for reduce the NPE ratio to 5% and to keep the CET1 at 11.5% – say the Equita analysts – it is necessary to sell about 10 billion NPE with NPL selling prices of not less than 30 cents (45 cents for UTPs), hypotheses that seem realistic only with intervention public".

Alternatively, the Treasury could request more time for exit strategies

The fact is that as Il Sole 24 ore reports to carry out the sale, the Treasury and Brussels would be considering as a solution the involvement of Amco – specialized in the management of problem loans – to free the Sienese bank of about two thirds of its non-performing loans and thus facilitate the process of selling the Npl. In essence the actions of Amco, or the former SGA, would be conferred to minority shareholders Mps in exchange for the conferment of impaired loans of the Sienese bank. As the newspaper of Confindustria writes, the positive effect of the splitting of a piece of balance sheet (with assets and liabilities) is that the negative impacts on the capital of MPS would be neutralized, which instead would not occur in the event of a sale. The minority shareholders, who would find themselves cleaned up but in fact lost weight, would be offered the possibility of entering the capital of Amco, if they did not exercise the right of withdrawal ”. Problems? Unlike the assignments of receivables up until now, in this case the EU should give the green light to an operation that involves exchanging a piece of the balance sheet (of Mps) with shares (of Amco), something that has never been applied before and which could be seen not favorably by Competition Commissioner Margrethe Vestager. Then there is the issue of the price of non-performing loans and shares.
In any case, soon expects a response from Brussels otherwise for Mps alternative solutions, such as a partial transfer of the credits or the postponement to 2020 of the road map about the exit from the capital of the bank by the MEF.

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