The share of Monte dei Paschi di Siena rose by 1,8% in the mid-morning, achieving one of the best increases of the Ftse Mib, which in the same minutes gained 0,47%. Mps benefits from the rating improvement by Moody's. The agency has raised the Sienese bank's senior long-term debt and deposit rating to B1 from B2. In a note, Moody's explains that the improvement is due tocapital increase of 5 billion of the bank fully subscribed, which strengthened the Bank's capital buffer, in the face of pressures from low asset quality and expected net losses for 2014 and potentially also for 2015.
However, the outlook remains negative. Indeed, the rating agency notes that MPS's financial fundamentals are still vulnerable and despite the capital increase, the bank is still exposed to the EBA's stress tests. The standalone Bank Financial Strength Rating (BFSR), the note specifies, "has been reconverted from caa2 to the Baseline Credit Assessment (BCA) scale at caa3". All ratings on the bank's long-term debt instruments and programs were affected by this action. At the same time, the ratings of the subsidiary Mps Capital Services were raised in line with those of the Parent Company.
Furthermore, yesterday the Board of Directors of the Sienese Bank approved the project for the merger by incorporation of the wholly owned subsidiary MPS Immobiliare in Banca Mps which will lead to a strengthening of the statutory and supervisory assets of approximately 594 million, at an individual level, estimated on the basis of the accounting data as at 31 March 2014.
The note specifies that since it is a merger by incorporation of a wholly owned subsidiary, the operation has no effect on the consolidated financial statements and regulatory capital. The merger is part of the strategic objectives outlined in the 2013-2017 Business Plan and falls within the scope of managerial actions aimed at streamlining the group's organizational and corporate structure. The implementation of the operation is subject to the issuance of authorization by the Bank of Italy.
