It’s been a little over a decade since the Bank of Italy, Antonio Fazio, in the name of stability, he handled the bank crisis behind the scenes putting too often the dust under the carpet. Yet it seems a century has gone. Today the approach calvinist of the new Supervision, at the head of the division of the Ecb, led by Danièle Nouy, is the exact opposite: by "flexibility" and privacy, it is passed to the stiffness and advertising. Without worrying about the consequences. The case of the Montepaschi shows, the bank of siena has many problems, no one denies it, but the Ecb has played a crucial role in making these problems unmanageable. And create a ripple effect throughout the Italian banking system
Far from regretting the time of Fazio, but the facts speak for themselves. In these months, the Frankfurt has first imposed a care from the horse to Montepaschi, on the basis only of the adverse scenarios assumed in the stress test. Then he pointed to a given firm, i.e. 31 December 2016, to resolve all the problems. Then he denied any extension. Finally, once it is clear that the state intervention would be necessary, has decided to change all the parameters of the calculation and increase the capital increase of Mps from 5 to 8.8 billion.
Treasure: the bottom 20 billion enough for all the banks. The State of up to 70% of Mps
Nobody criticizes these decisions, which depart from a situation of Mps really degenerate. But any question you have porsela: it is right that Supervision imposes draconian measures and deadlines set in stone, without thinking of the consequences that its decisions have on the entire system, and before that on the health of the monitored? It is right that all minimum details are made public, including deadlines, creating serious disturbances in the markets that in the end make impossible saves requested by the Ecb itself? On the Mps could go through a different route, to achieve the same result without public money? You could avoid the contagion effect and disorientation, on the whole the Italian banking system?
Chronicle of a death announced
Before answering you have to walk the last stages of this crisis, which has forced the State to save the Mps. It all starts on the 23rd of June 2016: in the light of the stress tests that see Mps come out as the worst bank in Europe in a possible crisis situation is extreme, and the Supervision of the Ecb(as the Supervisory board, led by Danièle Nouy) requires the bank of siena a clear plan for the reduction of non-performing loans. Mps in fact has an exorbitant amount of loans of income, equivalent to 21.7% of total loans at the end of 2015: their disposal is – rightly – considered to be fundamental by the regulatory authority. The Ecb sets the time limits for this disposal: for three years, from 2016 to 2018.
Mps back public, what changes for savers
badi: Mps is not insolvent at that time, but on the contrary has a positive net worth. And it’s not even at a loss, since closed the period with a profit of 302 million. But the reduction in non-performing loans from the balance sheet is considered by the Ecb – again, rightly – a priority. Mps not only cash, but ups the stakes: seeks to eliminate is not a part, but even all 27 billion of non-performing loans immediately, and to recapitalise to 5 billion, plugging the hole that you will create once you have cleared the Npl. The Ecb approves the plan, but it imposes various conditions. Among them, in November, it adds a: to the floor in three moves (securitisation-loan bridge-rise) is to be made by 31 December 2016. Passed that date, states the Ecb, Mps ends up in the resolution. With a strong risk of bail-in.
This time limit, in view of the constitutional referendum that could create problems in finding investors, creates obvious agitation on the market: the stock drops in the Stock market, the deposits fleeing from the bank, the subordinated bonds plummet. And the whole Italian banking sector enters the vortex of a Bag. It would have probably happened anyway, but if there had been a limit, thus, imperative to separate the life and death of the bank, perhaps the market would have been less agitated.
So, after the “no” to the constitutional referendum, the situation worsened. Investors had to subscribe to the capital increase (starting from the bottom of Qatar) is dispelled. The political vacuum increases the uncertainty. Mps try to ask the Ecb for an extension of 20 days. But nothing to do: the limit of the 31st of December, because of the lack of liquidity of the bank, remains carved in stone. So there is nothing for it to do that open the doors to the State, penalizing those who hold subordinated bonds. And just when all seems resolved, the Supervision of the Ecb (without even unanimity) launches the last game: as now it enters the State, is asking Mps on a capital increase of almost double than the one approved by the Ecb itself previously. Creating new market uncertainty: is it possible that charges similar to be in the future, advanced for other banks?
the Ecb, the treatment of the Greek to the rescue of Monte Paschi
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The situation of the Mps was and still is serious, the referee had to blow the whistle. But this time also the impression is that the intervention has made it even more difficult to handle a situation which, however, was and is considered manageable (otherwise it would not have endorsed the attempt by private, but it would allow the intervention of the State). And to think that this is not the first time that the Surveillance produce side effects. Two years ago, when Siena (together, the Carige) was battered from the stress tests published on 26 October 2014, the Ecb took seven weeks to approve the restructuring plans of the two banks. A time too long for the Bag: the two titles in that period of time lost, in fact, 2.3 billion on the list, that is, two-thirds of what the two banks would have had to collect on the market in compliance with the requirements of the regulator. That, since then, has continued to mark the lives of the two banks to the sound of dik tat and ultimatum (just think of the "cheer" to the offer made by Apollo to Carige). And also between Milan and Verona, they know something about, given the constraints placed on it by the Ecb for aggregation between Bpm and Banco Popolare: is it possible that the poles and the intransigence of Frankfurt can discourage other institutions to join, what is instead desired from the same Surveillance?
No one can say that Italian banks do not have problems with it. And no one can think that the Ecb would not have had to intervene. Far, it is clear. But the mode of action, the inflexibility, the inability to communicate to the market by a supervisory Authority which is not only new but is also the result of compromises between various Countries, have undoubtedly worsened the situation of already worn out of these banks. A good doctor must save the sick man, and if every patient is unconscious from the medicine or the dosage prescribed, something must still be mean.
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