The negotiations between Unicredit and the Italian government have officially collapsed: at the end of July the second Italian bank had agreed to start exclusive negotiations for the purchase of “some selected assets” of MPS controlled by the Mef with a 64% stake. Yet, just under 15 years had passed since Monte dei Paschi became the third Italian credit institution by buying Antonveneta for 9 billion, in what was later identified as one of the cornerstones of the crisis of the oldest bank in the world. Between acquisitions and derivatives, between preventive recapitalizations and Monti bonds, MPS in this period has burned billions of capital and public aid, up to the attempt to secure it by trying to put most of the assets into Unicredit. But this attempt has failed at the moment.
The institute led by Andrea Orcel concluded the due diligence in September to understand which Monte assets to incorporate: on the plate about 3.9 million customers, 80 billion in customer loans, 87 billion in deposits, 62 billion in assets under management and 42 billion in assets under administration, strengthening its competitive positioning in Italy and in particular in the Center-North, where 77% of Mps branches are located. Unicredit could therefore see its market share grow in Tuscany by 17 percentage points, in Lombardy and Emilia Romagna by 4 percentage points and in Veneto by 8 percentage points.
Derivatives, Antonveneta and capital increases
The Monte crisis originates from some financial transactions and, as mentioned, from the 9 billion purchase of Antonveneta. The combination of these moves and the 2008 financial crisis led to large capital deficits for the bank, which had to resort to capital increases several times. Without considering the next one, which is estimated at around 2 billion, Mps asked shareholders and the market for 2.152 billion in 2011, 5 in 2014, 2.993 in 2015 and 8.327 in 2017. (breaking latest news) Mi1 / Arc
The entry of the state and the account for the tax authorities
On this occasion, after a new maxi increase of 5 billion with private resources jumped in December 2016, the State has chosen to take on the problems of Monte, becoming its main shareholder. The account for the ministry was approximately 5.4 billion, divided between a capital increase (3.9 billion) and public funds to restore the shareholders and retail bondholders (1.5 billion). To these will be added shortly those necessary to bring Mps into the arms of Unicredit without the latter’s capital ratios being affected, with a further commitment that is estimated at approximately 1.5 billion and which brings the total to approximately 7. billions.
The capital and numbers of Mps
The numbers certify that the situation of Mps is always problematic: the group closed 2020 with almost 1.7 billion in red, followed by 119 million in profits in the first three months of 2021. On the balance sheet, Monte was the worst among the main EU banks in the EBA stress tests, with Cet1, the best quality capital, which in the adverse scenario would have become even negative in 2023. It had already happened: in 2016, on the eve of the State intervention, the result it had been even worse, with the hypothesis of a negative Cet1 of 2.2%.