Here are the details of the industrial plan 2016-2019 presented this morning to the investors by the new ceo of Banca Monte dei Paschi di siena, Marco Morelli. Increase of capital, the securitisation of non-performing loans, redundancies and closing branches. These are the main ingredients of the plan.
savings: the 2,900 redundancies, and 300 recruitment
The new business plan of Mps “will focus on greater efficiency through the reduction of approximately 2,600 employees, of which the 2,900 redundancies, and 300 recruitments – moving, ever-greater of the remaining employees to business activities and the closure of about 500 branches. “The cost of the staff – it is explained – will decrease by about 9% to 1.5 billion euro in 2019 from approximately 1.6 billion euros by 2016″ and the reduction will be through natural turnover, and the activation of the solidarity fund. The Mps provides that the current 25.200 employees of the bank will fall to 22.600 units at the end of 2019. Come out of 2,450 employees through the use of the solidarity fund of the 450 following the turnover. 2,900 cuts will be partly offset by 300 assumptions.
The securitization of non-performing loans
The board of directors of Monte dei Paschi confirms, with some variations, the extraordinary transaction that leads to the sale of the 27.6 billion in unpaid loans through a securitization transaction at a price of 9.1 billion (equivalent to 33% of the value). The share capital increase of up to 5 billion, assisted by a new agreement pre warranty with a consortium of financial institutions. The pre-guarantee excludes the subscription right for the existing shareholders. The shareholders ‘ meeting called for 24 November, also provides for the reduction of the capital loss carryforwards and results as at 30 September, and the grouping of the shares (1 to 100).
The capital increase: involved bondholders junior
The plan confirms the potential offered by conversion into shares of the subordinated bonds as an element of the recapitalisation, together with a component for cash confidential “to any cornerstone investors for the purchase of a significant stake in the bank and a further component for the cash, part of which may be allocated to existing shareholders. Morelli has stated that the offer of conversion and bond is subordinated in shares is “addressed to all the bondholders, including the retail business.” The bridge loan for the securitization provides for a senior bridge up to 5 billion, a senior mezzanine up to 1 billion. The mezzanine tranche will be made by Atlas to 1.6 billion, while the junior will go to current shareholders. The meeting will be the proposal to reduce the share capital by € 9 billion to 7,36 billion to cover past losses and those of the nine months.
In the nine months accounts in the red for the suffering
The Monte dei Paschi closes the nine months of the year with a red surprise 849 million, following the decision to rectify in the third quarter 750 million of the loans classified as failures likely. The revenue decrease 3.417,5 million (-16,6%) compared to the same period of 2015. The interest margin, amounting to 1,519 million, cala 11.6; net impairment losses on loans equal to 2.020 million increase of 43%, the operating costs amounted to 1.929 million, down 1.9%. Loans, that drops to 105 billion euro (-6,8%), the direct collection of 105 billion. The Cet1 ratio cala to 11,49% 12,11% in June due to the effect of the loss for the period, partially offset by a reduction in rwa (assets weighted for risk). Instead, as regards the plan to 2019, this provides a profit of more than 1.1 billion at the end of the period against a loss which this year will be of 4,83 billion following the sale of the sufferings, growth of profitability (rote) from 0.6% to slightly less than 11% in the three-year period, the Cet1 ratio, which grows from 11% about aal 13,5% and a cost/income ratio drops from 60% to 55%. Improves the management of credit risk and strengthening liquidity.
The offering of Icbp for management of payment cards
The Monte dei Paschi received last week an offer by the Istituto Centrale delle banche popolari for the acquisition, for 520 million, the scope of activities related to merchant acquiring business (management of payments for the credit cards) as well as a proposal for a commercial partnership. Writes to the Mps in the communiqué on the industrial plan. The board of directors has agreed an exclusive Icbp until the next December 31.
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