The Mps board finally manages to launch the new restructuring plan agreed with Europe and the Ministry of the Economy for the 2013-2017 period which replaces the one launched for the 2012-2015 period. The guidelines of the action program for 2017 were presented to the financial community pending approval by the European Commission expected by the date of the quarterly report set for 14 November. In short, for the details we will have to wait for that date. However, the veil has been lifted on some of the most controversial points of recent months, from salaries to managers to further cost cutting.
In particular MPS as regards the remuneration of top managers it undertook to “respect the maximum remuneration limit – agreed with the European Commission for an amount equal to 500.000 euros – until completion of the capital increase or full repayment of the New Financial Instruments (Monti bonds ed).
On the cost front, the closure of the branches at the end of 2017 it rises to 550 units from the 400 foreseen in the plan for 2015 (and already closed in September 2013) while the personnel cuts envisage a total 8.000 redundancies in 2017 from the 4.640 envisaged in the 2012-2015 plan, of which 2.700 already completed at the end of June 2013, to reduce personnel costs by 500 million. "For the remaining quota - reads the note - of approximately 5.300 employees, in addition to the industrial operations of the sale of non-strategic activities and outsourcing, the Plan provides for solutions that allow the achievement of the objectives with the least possible impact on employment through the use of Solidarity Fund, as part of the envisaged phases of confrontation with the trade union organisations”. The secretary general of Uilca, Massimo Masi, has already said he is "extremely concerned about the number of redundancies and the lack of clarity on the Solidarity Fund".
The reduction in administrative expenses then went from 285 million euros forecast in 2015 to 440 in 2017, of which approximately 140 million euros achievable by 31 December 2013. Operating costs are thus seen to decrease by 4,8% in terms of CAGR 2012-2017, the cost/income ratio down to 50% in 2017 from 58,5% of the previous target in 2015. The aim is then for revenues to grow by 0,8% in terms of CAGR 2012-2017.
Not only. The request has come from the EU that if the commercial objectives on revenues and profitability are not achieved, further cost containment measures must automatically take place.
“We don't start from scratch but after several months of hard work where we significantly changed the structure of the bank”, wanted to clarify the CEO Fabrizio Viola during the conference call to present the plan. “In the last year – he explained – the Bank's relaunch materialized through important results in terms of corporate reorganisation, commercial development and strong cost containment, despite the presence of a more difficult market context than expected. The second phase is now starting which will see us engaged in continuing the relaunch, in executing the Restructuring Plan and in repaying the State debt”.
Mps has undertaken to repay 2014 billion Monti Bonds by 3, i.e. more than 70% of the total and to reduce the securities portfolio by Italian state in AFs from 23 billion in June 2013 to about 17 billion nominal in 2017. A real roadmap, as Mps defined it in the presentation slides, which it foresees in 2014, the launch of the maxi capital increase of 2,5 billion (subject to the approval of the shareholders' meeting and to which "Bankitalia has not raised any objections", specified the financial director Bernardo Mingrone) and the repayment, as mentioned, of the 3 billion Monti bond. Subsequently, from 2015 to 2017, the other 1,1 billion in state aid will be repaid. The repayment of Ltro funds will begin with one billion in December 2013 and will end at the beginning of 2015. A path that should lead to 2017 million net profit in 900 (600 million the target of the previous plan by 2015), a Rote of around 9% by 2017 (instead of 7% by 2015) and regulatory capital fully compliant with the requirements (CET1 “phased in” at 10% instead of 8% as of 2015).
"The restructuring plan preserves our vision and the strategic priorities of the Bank intact - commented the chairman Alessandro Profumo - but allows us to accelerate its relaunch through capital strengthening and the early repayment plan of the New Financial Instruments, in the full interest of all our stakeholders”. For dividends, however, we will still have to wait. "I don't expect the distribution of a dividend in the short term", said the financial director of MPS, Bernardo Mingrone, during the conference call with analysts, explaining that "the Commission has imposed the suspension of dividends but if we manage to raise capital then he can remove it. In any case, I don't expect a dividend in the short term”.
Waiting for the plan whose approval had been announced in a note in the morning, the stock on the stock exchange it jumped by 6,26% to 0,23 euros with trades more than double the daily average of the last month (just under 348 million pieces changed hands).
