Another storm on bank stocks in Piazza Affari. In mid-morning, while the Ftse Mib is down by 0,9%, at the bottom of the list travel Ps (-7,35%), Bper (-5,19%), Intesa Sanpaolo (-4,94%), Finecobank (-4,16%) And Where's Banca (-3,96%). Bad too Unicredit (-3,63%), Banco Popolare (-3,49% despite the capital increase closed at 100%), bpm (-2,64%) And Mediobanca (-2,11%).
THE INDISCRETION ON THE ECB'S LETTER TO MPS
First of all, the new rumors on the matter weigh letter-ultimatum from the ECB to MPS (the stock was suspended several times in a volatility auction), in which Eurotower invites the institute to present a three-year plan as soon as possible to bring the percentage of non-performing loans back to normal.
According to the ECB, MPS must develop a plan to dispose of at least ten billion euros of gross non-performing loans, of the more than 27 billion in the balance sheet. A higher target than that envisaged in the bank's industrial plan, which envisaged the sale of 2018 billion bad loans by 5,5 and the internal recovery of another 6 billion.
THE MPS NOTE
These items have been partially corrected by MPS itself. The institute "acknowledges that it has received a letter from the ECB notifying its intention to request compliance with certain requirements relating, in particular, to non-performing loans", writes the Bank in a note, explaining that these requirements are indicated in a draft decision on which the institution was given the opportunity to present its arguments in this regard by 8 July 2016. More specifically, the draft decision includes a table according to which the Bank is required to reduce non-performing loans in the next three years and upon reaching the indicated parameters. The targets for 2018 are for a reduction in gross exposure from the current 46,9 billion to a maximum of 32,6 billion and for the net exposure from 24,2 billion to a maximum of 14,6 billion.
The parameters on the decline in non-performing loans contained in the letter sent by the ECB "are in line with the objectives of a program of specific actions recently approved by the competent MPS bodies - continues the note - and simultaneously subjected to assessments by the ECB, aimed at increasing of the amount of the disposals of non-performing loans already envisaged in the 2016/2018 business plan".
Montepaschi also specifies that in the draft decision of Frankfurt it is also required to provide the ECB by next 3 October 2016 with a plan that defines what measures can be adopted by the Bank to reduce the ratio between total non-performing loans and total loans (NPL ratio) to 20% in 2018.
"The Bank - concludes the note - has in any case immediately started discussions with the European Central Bank in order to understand the exact scope of all the indications contained in the draft decision and to present its deductions in this regard in view of the final decision, the issue of which is expected by the end of July 2016”.
The Supervision of the ECB is German-led and for now has not given any indication about Deutsche Bank, rejected in the Fed's stress tests and defined by the International Monetary Fund as the most dangerous "source of systemic risk" at a global level.
THE TUGGLE BETWEEN RENZI AND THE EUROPEAN COMMISSION
Meanwhile, an article in the Financial Times also contributes to raising the tension on Italian banks, according to which the Prime Minister Matteo Renzi is ready to save the institutions with public money regardless of European rules.
In fact, the confrontation between the Renzi government and the EU Commission continued throughout the weekend, in search of an agreement on the recovery of the system that takes into account the rules on public aid and the rules on bank bailouts. The key to unlocking the negotiations lies in the BRRD directive, which provides for the "precautionary" recapitalization of banks that are unable to pass the stress tests that the EBA will publish on 29 July.
At that point the government could recapitalize with public funds without state aid. Deposits would not be affected and bondholders could also be safeguarded. The path is actually narrow. Brussels seems willing to open up to the needs of small investors but Italy, fearing capital flight, wants the window to apply to institutional investors as well.
But time is running out, especially on the Monte Paschi front. However, the Banca di Siena could represent a case in itself, given that the public intervention could be considered the continuation of the one existing since the issue of the Monti bonds.
