On the one hand the plan initially outlined by JP Morgan and Mediobanca but reworked by the new CEO Marco Morelli, on the other the alternative proposal by Corrado Passera. The board of directors of Monte dei Paschi di Siena decides not to close the door to either of the two: in fact, the bank is going ahead with the original plan established last July, at least as regards the recapitalization and the sale of non-performing loans, and then being profound reworking by the new head of the company but does not close the door to the proposal made by Passera, according to what is explained in the note issued on closed markets, after today during the board meeting the MPS share concluded the stock exchange session gaining almost 13%.
The reunion, chaired by the outgoing chairman Massimo Tononi, therefore examined the new business plan (which will be approved on 24 October) and confirmed the timing for convening the bank's shareholders' meeting by the end of November, when the new chairman will also be appointed: "The Board of The Board of Directors of Banca Monte dei Paschi di Siena SpA, which met today under the chairmanship of Massimo Tononi - reads the note -, continued its discussions on the contents of the business plan, which will be approved on 24 October. Furthermore, the Board of Directors, in confirming the firm intention to continue with the implementation of the recapitalization operation and the simultaneous sale of the non-performing loans previously communicated to the market, took note of the update by the Chief Executive Officer and the advisors, regarding to the non-binding proposal received from Dr. Passera on October 13th”.
What is certain is that in Siena, the weather expected for the next few weeks will be incandescent. Just as happened today in Piazza Affari, where MPS shares staged a real exploit. The proposal presented by Passera and examined today by the Board of MPs has in fact triggered a real rally by the Sienese bank on the Ftse Mib: the stock was hit by a shower of purchases (volumes were very high) returning to the psychological threshold of 20 cents per share (0,195 euro).
Investor enthusiasm is linked above all to the fact that the tranche of fresh funds requested from the market by the ex-minister's project could be equal to or slightly less than one billion euros, a decidedly lower figure than the alternative hypothesis prepared by JP Morgan .
Mps: Corrado Passera's plan
Today's Board began to consider the details of the plan presented by the former number one of Intesa Sanpaolo and examined by the CEO Marco Morelli and the Lazard managers. A meeting preceded by various meetings with the advisors who were able to get an idea of the operation.
Passera, who is in Consob tonight to illustrate his plan to the Commission, this time has decided not to leave anything to chance. After the categorical No received last July from the former top management (three months ago the CEO was still Fabrizio Viola and Tononi had not yet resigned as president), the former head of the Mise decided to present a detailed project, very different from the previous one and above all similar to the proposal of JP Morgan and Mediobanca on which the managing director has concentrated over the last few weeks.
A "friendly" proposal, which does not envisage any change at the top management of the Sienese bank, and which therefore aims to avoid confrontation by betting everything on reducing the amount of the capital increase arriving in the coming months.
Passera's manoeuvre, timely forwarded to the Government and examined today by the Board of Directors, starts from a letter of intent from some institutional investors (including BC Partners, Atlas and Warburg Pincus.), whose entry would guarantee the arrival of 2,5, 1 billion euros. However, there would be one condition: the operation would be conditioned by the outcome of a due diligence on Monte dei Paschi, which would bring the need for new capital to 1,5-XNUMX billion and should be completed within a few weeks, thus allowing the bank to meet the deadlines agreed with the European Central Bank.
To the 2,5 billion invested by the institutions would be added a further billion euros, foreseen as an increase in option to the current shareholders, which would make it possible to avoid the now famous operation of conversion of subordinated bonds into shares, foreseen by the JP Morgan plan.
Like the latter, the proposal by the former number one of Intesa envisages the disposal of Non Performing Loans (Npl) through the creation of a bad bank, which however will be assigned a higher amount of non-performing loans, between 31 and 32 billion euro, compared to the 27,7 envisaged by plan A. Furthermore, the "transfer" would take place only after the capital increase and not at the same time, for the purpose of distributing the shares (i.e. the junior tranche of the securitized securities) of the Spv (the company vehicle for the securitization) to all the new shareholders of the Monte, and not to the current ones, as instead foreseen by the Jp Morgan plan.
Mps: JP Morgan's plan
It should be emphasized that the plan prepared by JP Morgan and Mediobanca, over the weeks, has also undergone a significant reduction in the share of the capital increase requested from investors. Indeed, initially there was talk of a recapitalization of 5 billion euros in order to respond to requests from Europe. Subsequently, the American bank tried to reduce the amount of the increase to 1,5-2 billion euros, thanks to the entry of anchor investors and above all to the voluntary conversion offer of bonds into shares for holders of subordinated bonds . As regards NPLs, as previously mentioned, plan A provides for the disposal of an amount of non-performing loans equal to 27,7 billion euro.
In this case, there would also be the ok from the Treasury, the main shareholder of MPS, and from the European Central Bank, an aspect on which the proposal presented by Corrado Passera cannot yet count on.
Mps: redundancies
The plan on which the top management of Monte dei Paschi is working does not only envisage the search for new capital to resolve the most urgent financial issues. On the other side of the management scale is the issue of redundancies: there are 3.000 exits at stake, of which 1.400 already identified by the old plan and 1.600 added to the new one.
However, the times to implement all the measures that will have to bring the Sienese bank out of the shallows are very tight. In a week, on Monday 24 October, the board will be called to approve the maneuver illustrated by CEO Morelli last Friday. And the complicated round of operations aimed at recapitalization will have to be examined by the extraordinary shareholders' meeting which should be held on November 18th.
On that same occasion, the shareholders will be called to express their opinion on the appointment of the new president of Monte, following the resignation of Tononi. And it is said, at this point, that in pole position - in the shortlist of names to be taken into consideration - the name of Passera does not appear despite the fact that cohabitation with Morelli does not promise to be easy for both.
