The collapse of the title seems to have no stop. After a -2,2% start, MPS is now tumbling down by 8,06% to 0,3319 euros per share. That the accounts would be bad, it was foreseen. But maybe not like this: the loss was 4,69 billion due to write-downs of 4,51% on goodwill and 222 million on other intangible assets. On the other hand, 2011 was a year of cleaning up the accounts for many large banks and a little realism on the numbers can only be good for Mps too. But in 2012 the visibility is low. Will the fourth quarter of 2011 really be the lowest point to then recover, as desired by Viola? Will it return to the dividend? Will Mps be able to escape the capital increase?
“Evidently the markets had different expectations especially as regards ordinary management and the extent of the write-downs. It happens. They reposition themselves at levels they deem appropriate”, commented the general manager Fabrizio Viola on the sidelines of the presentation of the results, while the president Giuseppe Mussari was absent at the last moment due to “institutional commitments”. Viola doesn't mince words: "To achieve results that satisfy everyone, a lot of work is needed both in terms of productivity and operational efficiency".
Overall, revenues fell by 1,2% due to the reduction in the interest margin of 2,4% (recovering in the fourth quarter +6,4%) and in net commissions (-6%) which, Viola said, they were the sore point of the 2011 results and in the fourth quarter the item that suffered the most”. Declining interest margin and commissions were only partially offset by a better trading result than in 2010. At the same time net value adjustments for loan impairment increased (+13,4%), those for financial assets mainly due to write-downs on AFS securities (available for sale), and operating expenses increased by 2,1% even if due to the valuation operations of part of the group's capital assets (net of these expenses, there would be a decrease of 0,8%).
Viola did not fail to underline the positive aspects of the balance sheet, including the acquisition of 50 new customers and a better liquidity profile. In 2012, the group will be able to issue more bonds than those maturing and this collection will be used to replace the interbank bond in the medium term. Liquidity situation improved at the end of the year also thanks to the ECB's unlimited auctions. Here MPS refinanced itself for about 29 billion. Where will this money go? In SME financing? "The new industrial plan will refocus the bank's business with a commercial model that takes advantage of the strong link that MPS has with the reference territory - Viola pointed out - But when we talk about ECB liquidity, we need to be very clear that it is temporary and therefore from a on the one hand there will be attention to the territory but on the other also the solutions to replace this liquidity with commercial funding”.
Among the positive points listed by Viola is also a credit risk with a stable profile; the improvement in capital levels to 8,5% thanks to the capital increase last summer and net of the Tremonti bonds (which will be repaid by June 2013); the maintenance of retail collections. And the prospect that conditions may stabilize in 2012 after a better start to 2012 for the bank than in the fourth quarter of 2011.
But who knows what Viola, who has recently arrived in Siena, thinks of the famous acquisition of Antonveneta, whose branches were paid for at a high price on the eve of the worst financial and then economic crisis since 29. But by now, it is clear, we are looking to the future: the arrival of Alessandro Profumo as president, described by Viola as "up to the task and with a good professional diversification", the new shareholders who are preparing to become shareholders who the intentions of the MPS Foundation will have to create a "strong shareholder base, interested in the bank, with medium-long term projects for the relaunch", said Viola. And also the review of the industrial plan which, according to management's expectations, will be ready at the end of May, which will in any case be conducted on the basis of a stand-alone perspective for the bank and which will give priority to the significant operational and organizational restructuring of the bank.
But in the future of Mps there is also the dreaded Eba led by Andre Enria who more than a stomach ache brought Giuseppe Mussari not only in the role of president of Mps but also in the role of president of Abi. The EBA, which has asked for the capital requirements of many European banks to be strengthened, is advocating for a capital increase. But Mps, as well as other institutes, has sent a strengthening program that bends over backwards to avoid a new request for fresh resources from members (including the Foundation already grappling with debts).
Already with the conversion on the Fresch bond added to that on the Fresh 2003, the requirement requested of MPS would be reduced to 2,2 billion from 3,2. On the program there are also shares, the withholding of 2012 profits (to find out more about the fate of 2012 dividends we will have to wait for the plan), and joint ventures. The verdict on the MPS strengthening plan is eagerly awaited. For now, everything is silent: Mps is still waiting for a response. Viola then assured that he had had no official or unofficial information regarding temporal changes and the amount of fresh resources requested by the EBA. In any case, you reiterated that if Mps does not make these moves by June, it would still consider solutions other than the capital increase, which "at that moment it would not even be appropriate to consider". On the sidelines of the meeting, Viola then denied the press rumors on the request for additional capital with respect to that requested by the EBA by Bank of Italy. “I don't know,” she said.
