Mps launches a plan of conversion for 11 bond and a threat to the “bail in” – the Newspaper

The Monte dei Paschi di Siena announces a public purchase offer on 11 subordinated bonds (total value of 4.289 million), with the obligation for those who adhere to reinvest the proceeds in share capital increase of 5 billion. The conversion, on a voluntary basis, falls within the scope of the recapitalization plan which will be submitted to a vote of the shareholders ‘ meeting called to Siena for the 24th of November. Convert bond subordinated shares serves to cover part of the five billion euros of capital deficits arising from the operation of the deconsolidation of € 27.7 billion of suffering and the rise of the coverage on the remaining impaired loans that are to remain in the belly to the Mps.

this operation – reads a note of the institute – responds to the primary need to meet the requirements and the requests reported by the Ecb, which has asked the Mps to prepare and announce a solution that is credible and adequate to address the critical issues and the challenges of the Mps as identified in the previous results of the supervisory activities and emerged, finally, from the stress test conducted by the european banking Authority, in cooperation with the Bank of Italy, the european central Bank, the european Commission and the european systemic risk board and concluded in the month of July 2016. The operation of conversion of the bond (only valid for Italy) stresses the institute, has the characteristics of complexity, because it consists of several components, each of which is essential to accomplish the purposes of the transaction as a whole. The components of the transaction, including this offering, are interlinked and, therefore, the perfection of each is a condition for the perfection of the other.

The threat of bail-in

If the save Mps fail and the bank was not able to comply with the capital requirements” requested by the Ecb, explains in a note to Mps, the institution “may be a serious prejudice to their business, up to compromising the existence of the necessary conditions for the continuity of the company, as well as important negative effects on the economic, equity and financial”. And failure to comply with the capital requirements can trigger the application of the resolution tools “that provide, among other things, the possible forced conversion of the subordinated securities”.

Splash in the Bag

Piazza Affari has closed on the values of eve (Ftse Mib index down 0.02% to quota 16.682 points; All Share -0,08%) a sitting still volatile in the wake of the uncertainties linked even in part to the victory of the Trump to the presidency of the Usa and especially the outcome of the referendum on the 4th of December. On the list of main splash of Mps (-10% to 0,2519 euro per share) with the announcement of the conversion of the bond and the risk that if this operation does not have a “satisfactory outcome” would put at risk the very continuity of the institution. Infected a negative impact on the entire financial sector, with Unicredit to -4,11%, Intesa Sanpaolo -2,27%, General -0,93%, Ubi Banca -4,90%. You saved Mediobanca with an increase of 0.36%.