The Stock Exchange “sells” Mps. What can happen now

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Tension rises over the fate of Monte Paschi after Unicredit’s reversal made official on Sunday evening. The situation is “dramatically confused” comments a banking source according to which the stalemate, if unresolved, risks costing the State (64% shareholder of Mps) over 10 billion, among the bank’s capital needs, the management of non-performing loans, the crux of the pending lawsuits and the operations on which more details will be available with the quarterly report of 4 November.

There are three alternatives on the table: a stew that involves the main financial operators present in the area in a system solution, the restart of the negotiation with Piazza Gae Aulenti with different formal conditions or a possible white knight, who at the moment however is not seen and which in any case would start from the bar set by Unicredit (over 7 billion dowry) and returned to the sender from via XX Settembre. The solution of the match is difficult.

The Treasury is already pressing on Brussels to negotiate longer times for the exit from MPS, planned so far by the end of the year, and the modalities of a new inevitable bailout, considering that in the absence of the hoped-for “structural solution” it will be necessary to equip Siena with at least 2.5 billion euros (compared to the current market value of one billion). In fact, this is the sum foreseen by the stand-alone plan of Mps on which the ECB has not yet pronounced itself, even if there are those who estimate at least double the capital needs of Rocca Salimbeni which closed 2020 with a red of 1, 69 billion. ‘It is the responsibility of the Member State to respect the commitments it has made and to propose ways of fulfilling them. It is therefore up to Italy to decide and propose ways on how to exit the property of Mps taking into account the commitments made in 2017, ”a spokesman for the EU Commission said yesterday, confirming the ongoing contacts with Rome. “The ministry is seriously and actively committed to finding a solution to this issue which is of great importance for the territory and for the banking system in general,” commented Maria Cecilia Guerra, undersecretary of the MEF yesterday. The Bureau of the Commission of Inquiry into the Banking and Financial System should already be convened for today.

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Yesterday, it was the subordinate bonds of Mps that made the expense of this path in the dark, overwhelmed with drops of up to 19% on fears of “burden sharing” (burden sharing provided for by EU legislation as a precondition for public support in bank restructuring ) which could pass from the conversion of subordinated bonds into capital or from the reduction of the nominal value. The four subordinated issues (for a total of € 1.45 billion) trade at a steep discount on their nominal value (up to 60%), while credit default swaps (contracts that protect against insolvency risk) have skyrocketed. Finally, in Piazza Affari, the Mps stock, after falling below the euro during the session, closed at € 1.05, down by 2.38%, while Unicredit ended the day at € 11.33, down by 1.7%.

From Piazza Gae Aulenti, meanwhile, the CEO Andrea Orcel, in a letter to employees and awaiting the presentation of the quarterly accounts on October 28, reiterated “our primary objective is not to make mergers and acquisitions but to build foundations solid for our future “. To then invite employees not to “get discouraged” in the face of “recent events”.

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