A few days late on the schedule, but the prospectus for Montepaschi's return to the Stock Exchange has arrived at Consob. The green light from the Commission should arrive by the end of next week, allowing the MPS share to return to trading on Piazza Affari between 16 and 19 October.
The institute's shares have been suspended since last December, when the last attempt to save the institute with the intervention of private investors failed and the Authority decided to block trading of Monte shares pending public intervention (the recapitalization was then 8,1 billion euro, of which just over half from burden sharing and the rest from state aid).
HOW MUCH WILL THE MPS TITLE BE WORTH
On the gray market, investors say that Mps will return to the stock exchange at a price of around 4,3 euros, equal to 0,45 times the tangible assets, on the levels of second-tier banks such as Bper and Banco Bpm. However, compared to other institutes, Montepaschi has been purged of 27 billion euro of non-performing loans and strengthened in capital, therefore the value of the security could rise up to approaching the multiples of Ubi (0,6) or Unicredit (0,75). In any case, the stock is easy to predict that the stock will remain volatile for months.
WHAT HAPPENS AFTER THE RETURN TO THE STOCK EXCHANGE
After the readmission to trading, the former holders of retail subordinated bonds will be refreshed, who, in compliance with the rules of burden sharing, had to convert their bonds into shares of equal value. These new shareholders will be able to exchange their securities again for MPS senior bonds held by the Treasury.
If all interested parties adhered to the offer (open only to savers who had purchased an Upper Tier 2008-2018 at the counter before 31 December 2015), the new shares collected would bring the Ministry of the Economy from the current 52,2 up to 70 percent of the Bank.
WHAT IS AT STAKE IN THE ASSEMBLY: BY-LAWS AND BOD
This is a reassuring margin, considering that the real objective of via XX Settembre is to exceed 60 percent: beyond this threshold, in fact, the State will be able to independently approve the new Montepaschi statute. This is why the extraordinary shareholders' meeting (yet to be convened) will only take place in the second half of November.
The real game, however, is the one concerning the appointment of the new board of directors. It is clear that the majority of directors will go to the Treasury, but Generali (second largest shareholder of MPS with 4,3%) has hinted that it wants to count on governance and is working on a minority list. Not only that: (some) funds also want to have a say within the new board.
THE ROLE OF FUNDS
In the post-burden sharing MPS capital, the weight of institutional investors is more than 20 percent. Also in this case we are dealing with former subordinated bondholders forced to convert their bonds into shares. Naturally, no compensation mechanism is envisaged for them by the State, therefore it is foreseeable that many will make cash by selling their shares on the stock exchange as soon as possible. According to the CEO of Mps, Marco Morelli – engaged in a road show between London and New York in recent days – the amount of these sales should be between 10 and 15% of the capital.
But other funds, reports Il Sole 24 Ore, want to remain shareholders of Montepaschi, with the aim of earning on the possible increase in the share. For this they would have expressed to the Treasury and the Bank the desire to have one or more representatives on the new board. They too, like Generali, are reportedly working on a minority list.
