Monte dei Paschi strikes a blow and responds in advance to the rejection of the stress test approving a very demanding plan which envisages both a capital increase of up to 5 billion euro by November and without public aid and the deconsolidation of the entire non-performing portfolio at a price of 9,2 billion with the intervention of Atlante. The Sienese bank led by Fabrizio Viola rejected the alternative plan presented by Corrado Passera and UBS together with American funds.
The new plan, Mps writes, is unprecedented in Italy and will allow the bank to remain among the leading institutions on the domestic market. The ECB has given its approval.
In view of the capital increase, MPS has already reached a pre-guarantee agreement with JP Morgan and Mediobanca in the role of global coordinator and six other banks in the role of co-global coordinator.
On the other hand, as regards the cleaning up of non-performing loans with their entire deconsolidation, the plan envisages that they will be transferred to a securitization vehicle at a net price of 9,2 billion euro and that the fund will intervene in this operation. Atlante which will subscribe the mezzanine tranche for 1,6 billion and the assignment to MPS shareholders of the junior tranche.
"Great satisfaction" for the new Monte plan was expressed by the Minister of the Economy, Pier Carlo Padoan, according to whom "it is a market operation which will make it possible to strengthen the bank's capital position and to free it completely from outstanding loans suffering. The operation will also allow the bank to develop a solid industrial plan, thanks to which it will increase support for the real economy through the disbursement of credit to households and businesses”.
In turn, the Bank of Italy, after noting that the negative result of the stress test for MPS is "about half attributable to the decrease in the interest margin" and that it was "particularly penalizing for the Sienese bank", maintains that with the new plan, Monte will be able to significantly increase the provisions on the remaining non-performing loans. “As a result of this operation – affirms Via Nazionale – the bank will hold non-performing loans, but not non-performing, in line with the average ones of the Italian banking system. Regulatory capital will remain at current levels and profitability may be affected by improvements both in terms of funding and credit costs and in terms of returns on assets and liquidity”.
Together with the new plan, MPS also approved the accounts for the first half of 2016 which close with a profit of 302 million compared to an adjusted profit of 328,9 million in the first half of 2015 and with a drop in operating profit and revenues but also of loan adjustments and non-performing loans. In the second quarter of 2016, Monte's balance sheet result amounted to 208 million euros, an increase compared to the 185,2 million of the same period last year.
