PERFUME CHALLENGES THE CONTRADES OF THE MPS TRADITION
THE STOCK APPLAUDS THE PUBLIC SHAREHOLDER HYPOTHESIS
“But with what right Mr Perfume would you allow yourself to say what actions the Foundation should take and what strategies it should follow?”. THE unions of Monte Paschi they entrust to the Financial Times their discontent in the face of the Profumo cyclone which is investing Rocca Salimbeni. A beneficial cyclone that reversed, with impressive speed and energy, the financial fortunes of the third largest Italian bank, collected by the former CEO of Unicredit and by Fabrizio Viola on the edge of the precipice.
Once again this morning, MPS shares are racing in the electronic enclosures of Piazza Affari, a significant increase, in the order of 6 percent, which becomes insignificant compared to the race which, between Friday and the first session of the week, allowed MPS to recover about a third of the land lost. But to what cause this sudden midsummer resurrection?
a) Alessandro Profumo limited himself to saying that “the Monte Paschi Foundation will not be able to invest its entire assets in a single asset in the future. The bank can only follow the evolution of this process with the utmost attention”. In other words, the Foundation, while maintaining a strategic role, will drop from the current 36 percent to lower stakes and will therefore have to share its power with other shareholders to a much greater extent than today.
b) But which other shareholders? Certainly, at least for the next few years, with the Ministry of the Economy guaranteeing the institution a new tranche of Tremonti bonds. The regulation of the loan provides that MPS, in the event it closes its accounts in the red, can refrain from paying the "cash" coupon to the ministry, replacing the debt with new shares that the Treasury will subscribe at the value of the shareholders' equity (1,05 euros per share against a stock market quotation of around 0,25). According to Chevreux's analysts, a recipe of this type, implemented for the 2012/13 financial years, will lead the Ministry of the Economy to own approximately 7% of Mps.
c) But why should the bank close in the red? The six-monthly report, examined by the board of directors on 28 August, will close with an imbalance of around one billion euros, due to the write-down of the goodwill value of Banca Antonveneta (now 2,2 billion). By 2013, Profumo and Viola aim to clear away the accounting rubble of the unfortunate operation that brought the oldest bank on the planet to its knees. In the meantime, from an industrial point of view, the restructuring signed by Viola will continue in forced stages: 14% less workforce, closure of 13% of the MPS network outlets.
d) Such a weighty recipe cannot be digested without repercussions by a structure so deeply rooted and sensitive to local politics, such as the Foundation. Hence the feeling that industrial restructuring, changes within the shareholding structure and clean-up of the balance sheet are different aspects of a single process destined to erase the somewhat perverse diversity of the bank, putting social and political balances to the test always consolidated on the territory.
e) But, beyond the Treasury, which shareholders? Impossible to answer today. Mps, which has more than 25 billion Eurozone government bonds on hand, is certainly not today the most attractive bank for an investor, Italian or foreign. But two drivers help the strong revaluation of the title: a) the improvement of the spread, which favors interest in a bank which is in practice another way of betting on the stability of the euro; b) the arrival of the public shareholder, at a price much higher than market valuations, would eliminate the risk of new increases to be paid by the shareholders.
f) Looking ahead, therefore, MPS promises to be the main laboratory for innovation in the Italian banking system with the blessing of the government. It could be the gateway to favoring a gradual entry of international partners, or an opportunity to exploit the contribution of Italian private shareholders hitherto unrelated to the logic of governance of Italian banks.
