MILAN – As if on cue to say the least eccentric, a letter came on the eve of the referendum on Brexit, heedless of its outcome. Sender Francofote the ECB, recipient Monte dei Paschi. Two old acquaintances: the authority of the Continental credit and the Sienese school that most of all in a year and a half of banking union is over behind the blackboard.
Few and categorical concepts, hitherto highly confidential, “Monte dei Paschi present as soon as a three-year plan to restore a physiological level, the percentage of non-performing loans of the bank “, is the juice of the letter. Translated into figures, and in actions, means more or less that the Sienese bankers have to compile a new map to dispose of at least a dozen billion euro of gross doubtful loans, the more than 27 billion years which hamper the revival. The objectives are higher than those of the MPS strategic plan a year ago, which provided 2018 sales of 5.5 billion suffering and the internal recovery of other 6 billion.
Selling more bad credits, however, it is neither simple nor painless. Because MPS evaluates them in the budget on average 39% of their nominal value, while the market a euro of suffering will buy an average of 20 cents, cleanse for good books could generate a capital shortfall of up to three billion, three times the market capitalization (we are at 1.12 billion after the loss of 69% from January). But for the “Roman control room” in these hours trying to save the situation, the Mps members are no longer the problem, even though the Treasury has a 4%.
The problem would be if anything bondholders if another jolt of the bank, the result of the outcome of the stress tests that the London-based regulator EBA will announce in late July, as it was feared negative. A month after the dissemination of the results, it seems that the recruitment criteria of the critical places guided by scenarios from Italian Andrea Enria have been so severe and grafted onto a reality for years “stressed out”, as to leave little chance for optimism on the tests of the most fragile players.
MPS has issued many years ago also subordinated bank bonds, ie those called by Directive Brrd in January to meet with shareholders and depositors richest for the first 8% losses before they can absorb the collective and public instruments. Worried about the fate of about 60 thousand retail investors who have held nearly 5 billion in subordinated MPS card that could depreciate heavily if the supervisors decide to call the resolution of the bank, because it was deemed no longer solid. For now, this risk does not exist: Siena us to early intervention, those measures early intervention that the new rules assign to those who supervises precisely to avoid the “resolution” of a bank. And that includes, in severe cases, the removal of the board and senior management, or the appointment of temporary administrators.
Even if you do not come to that, the government and bankers know that a less than optimal management of Mps case would be disastrous for the entire country. The numbers say, six times larger, for individuals and hoard, compared to bondholders of the four banks that sparked the political arena last winter. Underlines the moment, the stock market turbulence and internal ups and downs at various institutions: Unicredit whose new to Jean-Pierre Mustier will have groped strengthen its capital by at least 5 billion, to Veneto Banca and Vicentina that the fund Atlas must restructure and then sell, to the same four good bank with their box of doubtful loans, to be sold by September although so far not seen offers and decent prices.
Appropriate Mps will be discussed this afternoon in Rome, where the agenda a meeting between members of the Treasury summit, the Cassa Depositi e prestiti and other characters that for a couple of months have been the bottom of Atlas and try to deal with the responsibility of a complex situation. The contacts and meetings in June between Atlas partners, government officials, Sienese bankers and their advisors UBS and Citi still leave open several possible scenarios. One is a recapitalization of Atlas, which would serve a few more billion to face the Sienese delinquencies mountain. The fund managed by Quaestio sgr, inter alia, the route from MPS weeks with the purchase of credits difficult. An alternative to Atlas would be the contribution of the Sienese suffering to a specific vehicle (type bad bank), that leaves the burden of bridging the imbalance to the buyer of the part “good” of the Institute. The culprit, in that case, remains the Ubi: however the Brescia-Bergamo bank intends to consider the dossier only after the intervention of cleaning receivables of Atlas, or similar actors. And to Victor Massiah it has so far been a negotiator so demanding as to fade any negotiations with Siena and not.
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