“I don't know if Bersani will have to ask for help from the forces of the center to be able to govern. But I think he will. I imagine there will be a pretty large government of forces backing him." Alessandro Profumo, president of Mps, talks about politics, Europe, economy and politics, interviewed last night by Alessio Vinci at the Westin Palace in Milan for the cycle of meetings “The financial world. Scenarios and perspectives”, organized by the Private Banking of the Montepaschi group and by Progetto Città. For the banker Monti it was important because international credibility was fundamental for the country but today a political majority needs to be formed. “Monti has done a series of important things, many of which are correct, some of which can be debated”, he said without wanting to go too far and commenting with a joke: “Those who Google Alessandro Profumo see very well what I think in politics but there are friends of the press that they would immediately headline on this. Before, they always asked me about Mediobanca, sometimes they have constants”.
Profumo indicates some priorities of the new government "First of all we need to reassure those who have debt shares that we will continue with the recovery," says Profumo. It is then necessary to implement a redistribution of wealth "It's good to understand how to create it - he explains - but excess concentration decreases consumption". Last but not least there is the problem of investments. “It is necessary – he continues – to work on accelerating and simplifying decision-making processes, everyone says it but nobody succeeds. In my experience, Italian labor laws have always allowed me to make changes that I was unable to make in many other countries, the problem for foreign investments, on the other hand, is the timing for concessions and justice, i.e. the unmanageable times for creating a right and its protection. If you don't have legal stability you have a problem. If you finance an investment in alternative energy with a certain regulatory system and ex post the regulatory system changes is a problem”.
WORK AND PRODUCTION MODEL
The data on youth unemployment are certainly dramatic but Profumo invites you to bear in mind that the moment is not one of stability. “We have changed the labor legislation in a consistent way and we are not in a moment of stability. Businesses will start hiring again as they no longer have the lung of the precarious job. Then we have to think about the world of education, having vocational universities like in Germany could be important”. Then there is still the open question of the competitiveness of the system which for Profumo has been neglected by the debate, focused above all on the rules of work. “We have to redesign the production model – he says – For example, we have too many small and medium-sized enterprises. Small is beautiful to the extent that it looks good on the market, if I have to protect it it's a problem. Perhaps we need to discuss how to have more large and medium-sized enterprises which then drag along even the small ones".
WE NEED THE BANKING UNION TO ENSURE LIQUIDITY TO THE ITALIAN BANKS
The banking union is for Profumo one of the fundamental building blocks for the exit from the crisis which must pass through greater European integration. “The engine of debt growth is no longer usable whether it is private or public – says Profumo – We need to use other levers, some of which are the creation or intensification of the European internal market”. Among the priorities, it is essential that Central and Eastern Europe approach the GDP of Central Europe, that large infrastructure projects are European, that there is an exchange in the training of university students and that we arrive at the banking union. “If we don't have the Banking Union, our banks will always remain short of liquidity – explains Profumo – whatever people say, we have more loans than deposits, the money from the ECB ended up closing this funding gap. The criticism of SME financing is correct, but we cannot print the money and we need to understand how to get liquidity to the Italian banks. Of course we have also financed things that do not increase GDP, such as real estate takeovers, things that we will no longer do in the future and that we have already stopped doing".
Draghi has certainly been fundamental in solving European problems. “Often we quickly forget the past – Profumo points out – we were very close to the situation in which some countries could leave the euro by blowing up the European project. That risk has disappeared, today no one would bet on the fact that the euro will jump. And also some coverings that there have been on Mps are also linked to this ". But there are two considerations for Profumo to add: Draghi was able to do what he did because Italy was more credible; an exclusively financial solution is not enough because Europe has problems to solve anyway. As happens for a company where, Profumo makes the comparison, finance is fundamental but that is not enough if it doesn't have products to sell.
One of the central themes for the Europe of the future is also immigration. “All the other countries that grow do so due to demographic factors – explains Profumo – the USA is not growing more than us in per capita GDP but has a demographic profile of a developing country. The topic of immigration is fundamental for Europe. If we don't manage migratory flows intelligently, we will still have growth problems. In Europe, replacement consumption, the first to be reduced in the crisis”. We need to understand how to go back to reinventing a positive story in Europe, once, fortunately, the union around the peace project has given way to other concerns and we are once again talking about the impossibility of devaluing. Which, warns Profumo, is not the way forward. “Competitive devaluation – he explains – would be a big problem today: with a higher number of pensioners than before it means giving a blow to those who cannot adjust their debt. Competitive devaluation is a socially inequitable thing. After that, banks with a lot of inflation would make a lot of money, but I think that's deeply wrong."
MONTE DEI PASCHI TOWARDS THE ASSEMBLY ON FRIDAY
The return of confidence in the Euro area also helps the bank of which Profumo is president, Monte dei Paschi which, also thanks to the drop in the spread and international hedging, has seen a strong recovery in stock market prices. Here the new team led by Profumo is working to resolve a complex balance sheet and low profitability. “We have done some important things and we are starting to see some results – says Profumo recalling the agreement with the trade unions at the end of December, even if a group has decided not to sign – We know that in the next few years revenues will drop and we have to cut costs significantly. 94,62% of the 3.329 workers who voted in the meetings convened by Fisac-Cgil (18 out of the 62 planned as of 156 January) expressed their opposition to the hypothesis of a separate framework agreement on Banca Mps' industrial plan. The next crucial appointment for the bank is for Friday with the extraordinary assembly of MPS called to launch the capital increase necessary for the green light to the 3,9 billion Monti Bonds. In addition to disgruntled shareholders, trade unions and hecklers, there will be the leader of the 5-star movement Beppe Grillo and one of the founders of Fare per Fermare il Decline (or Michele Boldrin or the leader Oscar Giannino), present for political initiatives in the city. “The assembly of Monte dei Paschi is an assembly and there are assembly rules that provide for brief interventions. To the extent they stay on schedule we will listen to them with great respect,” Profumo said.
OPERATION ALEXANDRIA
Which has much more insidious fish to fry. The current Mps board of directors is investigating a derivative contract signed by Monte in the management of Mussari with the Japanese Nomura, called Alexandria. Today the newspaper Il Fatto wrote that "Monte dei Paschi di Siena in 2009 during the management of Giuseppe Mussari rigged the accounts with a debt restructuring operation for hundreds of millions of euros of which Italian taxpayers are footing the bill today ”. The contract, reconstructs the Fact, immediately imposes a correction in the budget of 220 million euros but the consultants of Pwc and Eidos are trying to quantify the real hole in the Monte's accounts which, according to an anonymous source cited by the newspaper, could rise to 740 million euros. The Alexandria operation, also being examined by the Siena Public Prosecutor's Office, would have served Mps to embellish the 2009 financial statements by unloading on Nomura the losses of a derivative based on risky mortgage loans which the Japanese would then have poured onto Monte through a secret long-term contract not transmitted by the then Mps top management, led by Giuseppe Mussari and Antonio Vigni, to the Kpmg auditors and to Bank of Italy. Mps, in relation to this news, announced that "the transaction called Alexandria falls within the perimeter of the analyzes underway in relation to some structured transactions carried out in previous years and currently present in the bank's portfolio, and subject of the previous press release dated 17 January last”. "As communicated - adds Mps - the analyses, undertaken by this bank promptly and with the maximum degree of attention and diligence, are nearing completion and it is expected that they can be submitted to the bank's board of directors for examination within the first half of the month of February. At this meeting, the board of directors may, after assessing the related impacts, adopt all necessary measures to ensure, even retrospectively, the correct accounting representation of the transactions in question". The bank, as already communicated, has in any case requested a 500 million euro increase in the Monti bonds to ensure coverage of the capital impacts of any balance sheet adjustments. The MPS share dropped 3,23% on the Stock Exchange after being suspended due to excessive downtrend.
