The banks, the government inaugurated the fund by 20 billion: save Mps – The Republic

ROME – The government inaugurated the decree “salvarisparmio,” which creates a fund from 20 billion for the banks and save the Mps protecting 100% of the retail customers. The measure was approved by the Council of ministers extraordinary meeting summoned late in the evening after the failure of the capital increase of five billion on the market of Montepaschi Siena, which is now in the Treasury becomes the majority shareholder. It is “an important day, carried out” for the Mps “reassurance for its investors and for its future,” said the premier, Paolo Gentiloni, stressing that the decree “is based on the authorization received from the Parliament with a large majority to constitute a fund of 20 billion to intervene in the protection of savings” and aims to “strengthen our banking and financial system”. The president of the Council has, therefore, required to state that “the modalities of this intervention have been agreed with the european authorities”.

In the course of the press conference, the minister of Economy Pier Carlo Padoan explained that the decree on the Mps provides for a mechanism of protection of the bondholders subordinated Mps to 100% by assigning them to the first shares and then ordinary bonds and has recalled that public intervention triggers the conversion forced with a loss. To work around this the same bank will activate a transaction mechanism for the exchange of the bonds into shares and then in ordinary bonds.

Of the 20 billion those that will be used for the Rocca Salimbeni, added Padoan, are “those enough to satisfy the requirements identified by the stress tests and the Ecb, which in the summer had certified the need for the bank to proceed with the increase to mobilize € 27.7 billion of suffering.

“The mechanism activated by the government, it is useful to Montepaschi – the minister continued – and is thought also for the other banks, we will see if there are other institutes who require it. We expect that the Mps is asking for the activation to be put in yet the need for capital and allow the bank to continue in its industrial plan which shall be approved by the european authorities, it will be the third Italian bank, who is back in force, to work for the support of the Italian economy”.

Padoan has finally defined “normal” the decision of the Consob to suspend all titles Mps tomorrow.

The investors, who had to tell the truth believed most of the institutional investors in the market solution, now find themselves with about two billion of subordinated bonds that will be converted into shares, with a loss imposed by the Eu directive on the burden-sharing that allows the intervention of the State, but by applying the losses to the conversion and dilution of shareholders. In order to safeguard the value then, you chose a compensation scheme that sees the bank swap shares with bonds of equal value to that of the subordinate. The Treasury will purchase the shares that are the subject of the exchange. The repurchase of shares result of conversion by the subordinated bonds, is the explanation of the executive, “aims to prevent litigation related to the marketing of the bonds” on the part of the over 40 thousand investors. Institutional investors, instead, will have a conversion that will pay them 75% of the nominal value.

in the next few months then you will see how the Treasury will manage its investment in the Mps and if there will be an agreement with Brussels to the progressive disposal of the share, maybe after that, the bank will have found the path of profitability and growth.

In the decree there are other measures for the sector, by the postponement of the transformation in the spa of the Popular to the tax treatment of the deferred tax assets (Dta).

Topics:

banks

Italian banks

Mps

Starring:

pier carlo padoan

Paolo Gentiloni