Oldest bank in the world with an uncertain future

by time news

Dhe rescue of the oldest bank in the world, Monte dei Paschi from Siena, is about to fail. Talks about a takeover by the major Italian bank UniCredit are expected to end without result in the coming days, as reported by the Reuters news agency. Neither the banks nor the government, which, as the majority owner of Monte dei Paschi, is seeking privatization, confirmed the report, but on Sunday there was little doubt that the government would now have to look for a new solution based on unofficial information in Rome and Milan.

So far, the goal has been to complete the privatization by the middle of next year. Now the Italian government could have to request an extension of the deadline, it is said in Rome. The future of the bank will also depend on the conditions set by the European Central Bank as the banking supervisory authority and the EU Commission as the controller of state distortions of competition.

Monte dei Paschi is the largest restructuring case in the Italian banking sector. The now uncertain future of the bank is also another blow to Siena and Tuscany. The credit institute, founded in 1472, is closely linked to the city’s history, with its money flowing into health services, kindergartens and the local university for five centuries. The fact that Monte dei Paschi sponsors the famous Sienese horse race, the Palio, shows the close ties. For a long time the bank was controlled by a foundation backed by the city of Siena. The generous dividends funded cultural and charitable institutions.

But that is the past. Monte dei Paschi had to be nationalized in 2017 after it became known that the bank had hidden losses of hundreds of millions of euros in complicated derivatives contracts. Several employees were jailed in the wake of the scandal that also contributed to the rise of populist parties in Italian politics. Since nationalization, the bank has remained a problem child for the government. In July of this year, none of the 50 banks examined came off worse than Monte dei Paschi in a stress test by the European Banking Authority (EBA).

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