The market solution for saving MPS with private capital has failed. Now we can urlarlo in the world. The plan of the leaders of the bank to put together 5 billion needed for the recapitalisation was a middle-flop and now it is inevitable the intervention of the State with all the consequences of the event.
In practice, takes up the agony. Because the save MPS from the State will not be in a day, but in the next few months. MPS must submit a new business plan and resume the negotiations with Brussels to negotiate the details of the intervention of the State that must comply with EU rules, involving shareholders and bondholders subordinated. Failed to save market, now you have to work to save the public against those people who have invested and believed in the bank. As is often said, "the devil hides in the details" and the details of the plan to decide who will be the drowned and the saved of the transaction, those who will lose all the invested capital and the lucky ones that will recoup at least a part or receive a refund.
MPS: failure of the plan
The plan for the rescue of the market of MPS has arrived at the terminus of the. From the two conversions (the first of the institutional and the second of the retail customers) of a bond subordinated the actions of MPS, the Monte has recovered less than 2 billion. It closed yesterday the second phase of the conversion, the one that would have had to bring in the crates of MPS about 1.5 billion stopped around to share a billion, a block not gone to her place that blew all the others.
the outcome of the conversion has led potential anchor investor, such as the sovereign wealth Fund of Qatar to pull back, leaving in fact the MPS without any parachutes. All hopes then were placed in the capital increase, but the failure of the operation was already inevitable. The public offer of the shares of MPS for a value of about 5 billion, with a price range between 1 and 24 the euro closed at 14 today with a result is insufficient to recapitalise the bank of siena. A failure is announced.
The choice to postpone the savataggio of MPS up to the eve of the deadline set by the ECB as at 31 December was purely political. And a mistake: it is traccheggiato, in the best Italian tradition, until what was an urgent need not become a disaster real and there was no more space for manoeuvre available to intervene in a way that is less painful. To put the issue to after the referendum, on 4 December, has been studied in a clumsy attempt to take a market solution. But how could you think that a bank today is worth 500 million, that is the emblem of the wicked administration of its vertices and of the operations scriteriate (such as the acquisition of Antonveneta) really could collect 5 billion on the market?
MPS: the intervention of the State
Today, the MPS took note of the failure of his rescue plan, and without the intervention of the State at the stroke of 31 December 2016 (expiry of mandatory set by the ECB), the bank will go into resolution with a lot of bail-in involves shareholders, bondholders and depositors (up to 100 thousand euro). To avoid the most dramatic scenery the MPS in the next few hours will ask for the intervention of the State.
The european directive BRRD (the one on the restructuring and resolution of credit institutions european) provides that a bank is solvent it can ask the intervention of the State "in order to avoid or to remedy a serious disturbance in the economy of a member State and preserve financial stability" (Article 32). the it Is likely that already today, having taken note of the outcome of the rescue, the MPS formally requests the State to intervene with the recapitalization as a precautionary, that is, in practice, to take the place of the market in the context of the capital increase from 5 billion.
The first problem to solve is that of liquidity: the MPS should honour the requests of the ECB, by 31 December, otherwise it triggers the bail-in. To take the time, then, the Government will launch in the next few hours, by a decree the first immediate intervention with government guarantees on loans and bonds of the MPS. the Buffered the emergency liquidity with the intervention of the Treasury, the decade, the maturity extended to 31 December, and then Brussels, the MPS and the Treasury will have the time to negotiate a new rescue plan. This, however, must start from the premise of involvement in the losses of shareholders and bondholders, as required by EU rules.
MPS will present a new industrial plan that gives account of the fact that the bank will be nationalized, and that the Treasury becomes the largest shareholder of the third bank of the Country. The public intervention will result in the recapitalisation of precaution which must necessarily pass by the burden-sharing that is, from the share of the shareholders and the bondholders to losses. The details of who, how and why will have to suffer losses will be the negotiations with Brussels in the coming weeks.
Who will pay for the rescue of the MPS?
Who will pay for the saving of MPS? This is not a question any; arrived at this point of the game, is The Question.
With the intervention of the State, to pay the cost of the bailout of the MPS will be the first bar in the coffers of the State, then all Italian citizens. The other day the new Government Gentiloni has launched a shield 20 billion, called save-saving to help with any banks in difficulty", but it was clear that the Government was preparing to intervene to save the MPS. the These 20 billion put on the table by Gentiloni will weigh on our public debt, and then on the shoulders of the taxpayers.
Not only. The european directive for the bank bailouts, has amended the rules for the recovery and resolution of banks starting from the assumption that in the case of expenditure on the part of the State, if there is a cost for the shareholders and bondholders of the bank in question. the In practice, the State will pull out the money needed to save the MPS, provided, however, that the losses fall on the customers of the bank.
In what way and extent? To these questions will give a response to some MPS only at the end of the negotiations with Brussels. The only certainty at the moment is that with the recapitalisation of precaution, we proceed to Burden-sharing (other than the bail-in involves shareholders and bondholders are subordinate to it. The bondholders senior and account holders, instead, are left out from the sharing of the losses, without prejudice.
The Burden sharing involves the conversion by force of subordinated bonds into shares at a price, for now unknown, it will certainly not be equal to the value of the invested capital and probably not even to 50% which is the current value with which the bonds are traded on a market. Among the involved there will surely be the approximately 40 thousand customers, who in 2008 signed the bond subordinate to the MPS "Upper Tier II", but the list of bond involved may be longer. Losses for the institutional investors who have the other two billion of subordinated and that will lose a large part of the invested capital.
For small investors there will be the opportunity (but also this will be the subject of negotiation with Brussels) to prove their purchased the subordinated without having the risk profile adequate to support an investment as risky and get a refund from the state fund. Without leaking too many details, the minister of the Economy, already in the past few days had spoken of an intervention to minimize or make non-existent" the negative impact on small savers, but the material is very slippery and you need to deal with Brussels and not ingrangere to the european rules.
All of these "details" will decide who will be the drowned and the saved in the saving MPS, but in the end, the sad moral is always the same: there will be customers and citizens to pay for the management, villainous and fraudulent, a bank’s historical on which no one has watched enough.
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