Monte dei Paschi again in the eye of the storm. The storm over the Sienese bank was unleashed on Friday 11 January when Mps announced the doubts expressed by the European Central Bank on its ability to achieve the objectives of the restructuring plan in terms of profitability and capital position.
The words of the undersecretary to the presidency of the Council then arrived to put the load of ninety, Giancarlo Giorgetti, according to which "there may be a problem with Mps in the coming weeks". It is difficult for the markets to ignore the alarm raised by one of the most important members of the Italian Government, especially if the object of this alarm is one of the banks which in recent years has experienced such serious difficulties as to make state intervention necessary and the consequent entry into the capital of the Treasury as first shareholder. The banking issue (not only Mps but also Carige, with the necessary distinctions) risks becoming yet another battleground between the two souls of the Executive, with the League inclined to intervene and the M5S strongly opposed.
But is MPS's financial situation again so serious as to justify a "warning" from the Government? Let's try to understand it from the numbers.
MPS THE ECB'S DOUBTS
The Supervision of the ECB has once again turned the light against the NPLs in the belly of the banks, despite the fact that Italian institutions sold over 2018 million euros of instruments in 70, a historical record. The new warning arrived from Frankfurt which, according to ABI data, refers to 37,5 billion of non-performing loans left in the belly, caused the stock market collapse of the main banks, at least until Unicredit, Intesa Sanpaolo and gradually all the others, did not have treassured the market on the "low impact" of requests arrived from the European supervisory body.
As far as Mps is concerned, the reference is to the approx 7 billion (gross) of non-performing loans which the bank will have to get rid of in the coming years - after having disposed of over 30 billion Npl in the last two years - with a burden on assets of 1,1 billion. Given the efforts already made, therefore, the goal does not seem so unattainable.
Moving on to profitability, according to rumors, the 2018 financial statements that MPS is expected to present on 7 February should close with a profit of 300 million euros. A figure that distances the target set by the 2017-2021 business plan at 1,2 billion euros, but which nonetheless represents a satisfactory goal after years of financial statements in deep red. The change in the reference economic context weighs on the bank's accounts. Simply put: the MPS plan was presented before, with the new government, the spread jumped above 250 basis points and global growth prospects showed strong signs of a slowdown. With the economic prospects changed, it will therefore be difficult to achieve all the objectives, which does not mean that the "catastrophe" is around the corner as the government's warnings (and quarrels) might suggest.
The second problem raised by the ECB also comes into play here, that relating to assets. MPS by the end of 2018 should have issued one second tranche of subordinated bonds. The attempt also failed due to the volatility and uncertainty that dominated Piazza Affari in the last few months of last year. The ECB has already granted a derogation, but placing this bond will be essential to guarantee the capital solidity required by the Eurotower. So for Mps the road is still long and uphill, but alarmism, justified or not, will certainly not help the cause.
