The European Central Bank (ECB) has not accepted this Friday the deferral request until January 20 for the locking of the recapitalisation plan of Monte dei Paschi di Siena (MPS), the bank is the oldest in the world, and the third in the sector the Italian financial assets.
Reuters reported that, with the not team of Mario Draghi, the MPS will have to ask for help from the public to the Italian State and subject to the conditions of recovery and resolution in force. According to Bloomberg, the Italian government in the management would already be putting the final touches to the operation of the intervention. Some analysts point to a solution as early as this weekend with the stock markets closed.
However, in a statement this evening, after an emergency meeting of the board of directors, the MPS denied that it received any communication from the ECB. A new meeting of the directors will be held on Sunday.
Sinking on the Milan stock exchange
The board of directors of the bank toscano, created in 1472, prompt this week when the ECB with a delay to close the operation of capital increase of 5000 million euros due to the political crisis in Italy after the victory of the 'no' in the referendum last Sunday and the resignation of prime minister Matteo Renzi. The bank claimed to need more time to get private investors to participate in the capital increase.
The limit until the end of the year for the completion of the recapitalisation plan is derived from the imposition of the ECB in the sense of the MPS to reduce the non-performing loans in net terms, of 23.5 billion euros to 14.6 billion euros, with a target buffer, in 2016, to reduce that amount to € 21.8 billion.
The titles of the MPS sank this Friday on the Milan stock exchange, with a fall of 10,55%. In the past thirty days, the losses totaled 24.4 percent. For the full year, to date, the fall in the stock is 84%. The fall has been extended to today other banking entities transalpinas and the index MIB of the bag closed in the red with a decline of 0.73%, despite registering a weekly gain of 7.1%, leading european indices.
THE MPS was the only bank that has not passed the July stress tests the 51 financial institutions by the European Banking Authority.
This emergency situation, in full political crisis, it may seriously impair the operation of the largest Italian bank, UniCredit, which, on the next Tuesday, go to the market to try a capital increase of eur 13 billion.
Two scenarios for the resolution
analysts point to two scenarios. The first would involve the purchase by the Italian State of the lines of subordinated bonds in the hands of 40 thousand private investors, converting them into public actions, involving an injection of 2000 million euros, and having a control of 40% of the share capital of MPS. This operation, which could be typified as recapitalisation of caution, he wanted to temporarily use public money to protect this type of investors holding subordinated debt in case of bankruptcy of the bank, would only be repaid after all other creditors. In a political framework of strong ascent of populism in Italy, the ‘punishment’ of 40 thousand small investors would be an earthquake.
The second scenario would by the Italian government to ask for a partial redemption of the European Stability Mechanism (ESM) for an intervention on the set of the banca italiana, and not only on the MPS, with the press transalpine to speak of an overall financial package of eur 15 billion. A partial redemption similar to Spanish in 2012. The Italian Treasury and the ESM in the judgment that this negotiation was in progress.
The solution of the problem of the MPS are obliged to respect the rules of the recapitalisation internal force since the beginning of the year stipulated by the Directive for Recovery and Resolution the Bank applied to the entire European Union. The rules of recapitalisation for the internal force losses on the part of shareholders and creditors of the bank.
Updated at 23h38
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