a crucial Week for the Mps: it is, in fact, started the operation to increase capital of the bank of Siena by 5 billion. In the case the operation should fail, you would open up two scenarios: the intervention of the State with a recapitalization that would result in the so-called ‘burden-sharing’, i.e. the allocation of losses with the private sector. Or you may take the bail-in, i.e. a save all a load of shareholders, bondholders and account holders. Here’s what could happen to different stakeholders vis-à-vis the bank of siena in the different hypotheses that are still open.
– ACCOUNT holders OR HOLDERS OF SAFE deposit BOXES: account holders are the last to be involved and it would be only in case of bail-in for those who have deposits above 100,000 euros and only for the part exceeding the threshold. Who has a safety deposit box, as well as the holders of the securities account, does not run any risk, because the bank plays the r ole of a guardian of property or investments.
– HOLDERS OF mutual FUNDS OR ASSET MANAGEMENT: in these cases there is a relationship of direct credit to the bank.
The assets of the funds is separate from that of the institute, and in the second case, the bank has only one delegation to the management.
- SHAREHOLDERS: they are the ones that risk the most. If saving private able it is easier that the new shares are issued at a price close to a minimum of 1 euro, which is not the maximum of 24.9 euros, ‘zeroing’ in fact, the existing capital (the current value of the bank may go down up to 29 million euros). The value of the current action lies in the law being attributed to the junior tranche of the securitisation, will have to try to recover € 27.7 billion of the sufferings of the Mps. But they will only the money that will be recovered once you have redeemed the senior and mezzanine tranches. Therefore, a value very uncertain, the fair value (fair value) has been quantified at eur 427 million from Mps. In the case of both the burden-sharing that of bail-in, shareholders would be the first to pay for losing everything.
– BONDHOLDERS SUBORDINATED: between the holders of bonds are the ones most at risk of losses. In the event that he should succeed in saving private those who convert will be in hand titles Mps, exposing them to the uncertainties on the relaunch of the bank, while those who will not convert will retain their own bonds and will be repaid at maturity. If, however, the conversions were too narrow Mps could not find the five billion needed to avoid the intervention of the State with the consequent ‘burden-sharing’. In this case, the bonds are subordinated, they would still be converted into shares, in this case forcibly, but at an exchange ratio lower than that offered by the bank (which will give shares for a value of between 85% and 100% of th e nominal value of the bond). From here, the dilemma between conversion and non-conversion of which are prisoners of the bondholders, from those retail. In the case of ‘burden-sharing’, 40 thousand small investors who have subscribed to more than 2 billion bond subordinated Mps can also hope for a refreshment from the part of the State, which must, however, be compatible with the european rules, for example by testing that there was a case of ‘misselling’, i.e. the sales inappropriate to subjects who were not able to understand the risks of the securities that they were going to buy. A procedure whose outcome is uncertain and which would be excluded by institutional investors, who hold € 3 billion of bonds.
- BONDHOLDERS SENIOR: are the bondholders guaranteed, that may be called upon to contribute to the rescue, however, after shareholders and bondholders subordinate, only in the event of a ‘bail-in’. Do not run any risks i f the saving private will be in port and even in the case of ‘burden-sharing’.
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