From Brussels comes the green light for Mps. The European Commission has given the green light to Italy's plan for the precautionary recapitalization of Monte dei Paschi di Siena for a total amount of 8,1 billion.
The project was found to be in line with EU standards and "will help ensure the bank's long-term profitability, while limiting distortions of competition", underlined the European executive.
Margrethe Vestager, European Commissioner in charge of Competition, said that the plan “will help Montepaschi to meet capital needs in the event of an unexpected worsening of economic conditions. To ensure its long-term viability, MPS will refocus its business model and clean up its balance sheet of more than €26bn of non-performing loans.
For the approval of the capital injection, continued Vestager, “the contribution to the costs of the restructuring by the subordinated bondholders and the shareholders was necessary, in line with the requirement of 'burden sharing' foreseen by the legislation on state aid".
Going into the details of the plan, the public intervention will amount to 5,4 billion euros, compared to the 6 billion previously estimated. As regards the securitization of non-performing loans held by the bank, the gross package is equal to 26,1 billion euro and the operation will be financed "partially by the Atlante 2 Fund". For the sale of the senior tranche to private investors, the Gas state guarantee was requested, while MPS executives will be subject to a salary cap (related to the overall salary package) corresponding to 10 times the average salary of Sienese institute employees.
Monte dei Paschi's rescue plan will be presented in detail tomorrow, July 5, by the top management of the Tuscan bank. During the ad hoc press conference, Minister Padoan spoke of the plan as “an extremely important element for the bank and the Italian banking system and a further turning point after the agreement reached a week ago on the Veneto banks. It is a plan that gives certainties, a sustainable time horizon to the bank which will have a very important level of capital”.
The number one of the Mef also underlined the sustainability of the plan, highlighting that the costs will not impact on citizens' pockets. Lastly, the minister confirmed his willingness to maintain the listing of MPS with a 70 percent state shareholding. For the Sienese bank, the securitization of the 28 billion Npl is expected by mid-2018.
