Montepaschi is moving towards the creation of a bad bank in which to transfer almost 10 billion euro of impaired loans, to be sold to Amco, the 100% treasury vehicle that manages the NPL (heir to the SGA, the bad bank of Banco di Napoli). And the stock flies to the stock market, with a rebound of up to 18% which brings the value of the share to 1.3 euros and capitalization to 1.55 billion. This is a decisive step: freeing the Sienese institute from a ballast that has been burdening its shoulders for years, could make it easier to exit the Treasury from capital, perhaps with a merger with another institution or with a sale on the Stock Exchange, which according to EU rules must take place by 2021. Or the creation of that public bank for investments and businesses that occasionally returns to the political debate of the majority, especially among the Cinquestelle. Except that not yet taken for granted, not even over time: now it is a question of indicating the market price of these npl, which could cause a capital loss and therefore the need for a capital increase.
The plan – which the bank and the Treasury, its 68% controlling shareholder have been working on for over a year in a continuous and for a long time bumpy confrontation with Brussels – received an informal green light on Friday from the European Commissioner for Competition, Margrethe Vestager: on the creation of a bad bank for Mps we have been in contact with the Italian authorities, and also on the evaluation of the assets that have been transferred, and from what we can see not an aid operation, which was decided before the Covid crisis. So said Vestager, answering a question about the indiscretion published by MF-Milano Finanza about the informal ok of the EU. It is up to the States to decide whether to notify something or not, and the Italians so far have not notified and we do not comment, we are in contact, we have assessed the levels, and we have given the Italians comfort on this issue, he added.
The note of Mps
Even the institute led by the new chief executive Guido Bastianini for a few days confirms the operation: Mps specifies that, with regard to the news released by some media today, regarding a possible partial split operation of a compendium formed, between the other, from a substantial portion of the group’s impaired loans, the transaction under study and discussions with the supervisory authorities are underway. Now the word passes to the supervisory authorities: Following the informal go-ahead by the European Commission, therefore, discussions have started with the European Central Bank and Consob regarding the definition of the authorization profiles for the start of the operation. In any case, underlines the note of the institute chaired by Patrizia Grieco, it is finally specified that investigations are underway regarding the composition of the compendium which, at the date of this press release, have not been completed.
Amco’s plan on npl
The reference to the amount of impaired loans to be passed on to Amco – the band bank led by Marina Natale and chaired by the general manager of the Treasury, Alessandro Rivera – who is already in charge of the NPLs of the former Venetian banks and Carige. The amount of non-performing loans to be transferred (between bad loans and problem loans, technically unlikely to pay, or utp) of about 9.7 billion, a compromise solution compared to the initial MPS request of approximately 14 billion euro, which allows the institution not to record too large a loss in terms of the income statement. For the EU, even if it will be 100% in public hands to detect the NPLs, the operation would not constitute State aid as the assessments would have been considered at market value, according to the formula required by European rules. It was a crucial point on which for months the interlocutions between the Treasury and DG Comp had become bogged down.
Times and the knot of capital
The operation could now be approved in an extraordinary assembly of Mps to be held this summer, in order to be able to conclude it within the year. But we need to understand if and what the need for capital will be, and who could do it. If a buyer – or an external investor – or the State itself, increasing participation and effectively nationalizing the institution to 100%. The Treasury must consider that for the moment there is a heavy capital loss: it has invested 6.9 billion euros in total for 68% for a bank that today is worth a total of 1.5 billion euros.