MPS, the oldest bank in the world, looks for a €3 billion capital increase and new partners

25/05/2015
Eleven months after the last capital increase of €5 billion, Monte dei Paschi di Siena returns to the market to ask for an additional three. It's the last act of the comprehensive assessment by the European Central Bank, from which a gap in capital of over €2 billion for the oldest bank in the world has emerged.

It's also the last act in a long restructuring path started four years ago and marked by heavy adjustments on credits, judicial investigations on past management, the surprise of derivative contracts. One of this, called Alexandria, with Nomura as the counterpart, is still outstanding. This derivative contract, which was restructured in the past, represents to this day one of the unknowns that weighs on the future of the bank. The ECB, in the role of sole supervisor in charge since November, has requested the closing of the contract as soon as possible. And, in effect, according to rumours that haven't been denied, the Senese bank is negotiating with the Japanese institution for an early resolution of the contract.
The new capital increase, as well as that of last year, is covered by a underwriting syndicate. There is no doubt, therefore, about the success of the capital increase and that €3 billion of new financial resources will reach Siena. The unknown, rather, concerns the future: it is certain that the President, Alessandro Profumo, confirmed one month and a half ago at the shareholders' meeting, will quit in the summer. Also certain is the growing marginalization of the historic shareholder, the MPS Foundation: four years ago it was the undisputed dominus of the bank, today it has 2.5% (although tied to a shareholders' agreement with Btg Pactual and Fintech which overall hold 9% of the capital), and it is not certain that it will follow the capital increase and defend its share. Axa will remain, linked to Siena by a solid insurance partnership and by a share of 3.2%, but the attention is concentrated on who could enter: hedge funds, as happened a year ago, or shareholders destined to remain to accompany the bank in its next moves?
It will be clear only after the capital increase. And this is not a minor detail: the ECB, as it restated in authorising the capital increase, wants MPS to find a partner as soon as possible.
But in Italy the large banks, Intesa and UniCredit, repeatedly stated that they are not analysing the dossier; the only potential partner could be Ubi, even if, in this case, the analysts would consider more convenient the acquisitions of only some limited assets of the bank. Outside of Italy, potential partners would be Bnp or Crédit Agricole, which, however, until now, have flatly denied any possible interest.
Meanwhile, in July there will be an additional shareholder: the State. After having financed (at a high price) the restructuring of the bank with €4 billion in public bonds, Siena is preparing to repay what remains and to pay the accrued interest this year in shares. In this way, the government will have a participation close to 4%. Not much, but enough to have a (further) say on the situation in MPS and on its possible outcome.

Fonte:http://www.italy24.ilsole24ore.com/art/markets/2015-05-21/mps-163055.php?uuid=ABv689jD

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