It cannot be said at all that the first day of MPS’s 2.5 billion euro capital increase went well: far from it. Not a promising debut at all, or even a nightmare, seen the collapse of option rights, which were downloaded without too many problems on the market, to the point of ending with a thud of 91.43% at 0.6715 euros.
The Monte dei Paschi di Siena stock, on the other hand, initially failed to make a price, with a theoretical rise of 7.5%, and then entered trading with a decline of 0.60%, which was accentuated but without major dramas: the shares closed the session of Piazza Affari with a decrease of 2.69% to 2.0075 euros.
In the prospectus of the Sienese bank, all the distrust of the ECB towards the execution of the capital increase of Monte di Stato is already engraved, but also towards the solidity of the post-recapitalization capital.
To be precise, “in the Draft SREP Decision 2022, the ECB underlines the high risk of execution of the Capital Increase and the distance that would remain, at the end of 2024, between the Tier 1 Ratio of the Group and that of its peers, since on the basis of the Plan, the 1 Group ratio would increase up to 14.2% (inter alia, on the basis of the final costs of the capital increase – see the 125 million euros that the bank will have to pay to the guarantors of the recapitalization operation – there will be a negative impact on this indicator by 2024 quantifiable in about 15 bp at the end of 2024), however, positioning itself for around 70 bps below the average level of significant European banks and around 150 bps below the current average for significant Italian banks. The persistence of this gap, in the long term, could represent a possible obstacle to future merger operations with an industrial partner. Furthermore, in the event of non-execution of the Capital Increase, Mps would remain extremely vulnerable to any possible negative evolution of the scenario ”.
Mps: ECB also wary of post-capital increase banks
The ECB recalls that the recapitalization “Represents the essential prerequisite, together with the implementation of the 2022-2026 industrial plan” per “Maintenance” of business continuity.
And warns that, even if the“High execution risk” of the operation can be said to be overcome thanks to the agreement with the banks of the guarantee consortium, the implementation of the plan will have to deal with various obstacles, as explained in the prospectus drawn up by Monte for the capital increase:
“In the context of the Draft SREP Decision 2022, the ECB highlighted points of attention that could limit the ability of Mps to fully achieve the objectives of the 2022-2026 Business Plan in the medium term with reference to: the persistence of tensions on the BTP-Bund spread and the volatility of the markets with potential negative repercussions on the cost of funding; the expected dynamics of commissions which, although considered reasonable, depend on the success of the commercial initiatives planned and are exposed to competitive pressure; the reduction of personnel costs based on a maneuver of redundancies of personnel exposed to the risk of fewer subscriptions than those planned; the increase in interest rates and a less favorable GDP scenario that can negatively affect the repayment capacity of debtors; the progress of complaints and lawsuits that is not in the full control of BMPS, as well as the ability to prevent the occurrence of further litigation. In the aforementioned document, the ECB also highlighted that the additional cost savings of Euro 40 million starting from 2024 due to the closure of branches, the corporate reorganization of the Group and IT investments in digitization could be offset by inflationary levels connected to the new macroeconomic scenario. which could be higher than expected and could not be limited to public utility services, also reducing the savings deriving from the same investments in digitization “.
In short, the supervision of the ECB has serious doubts about the success of the recapitalization of Monte Titoli and also expresses mistrust towards its alleged saving effectgiven that MPS will continue to face various challenges, in the face of a Tier 1 ratio – a parameter that relates to the capital of banks – which will still remain below average.
Mps capital increase: Axa confirms, the alert from Lando Sileoni (FABI)
There was some good news yesterday, with confirmation of the French insurance group Axa to participate in the capital increase with a contribution that can reach up to 200 million euros. Word of the deputy general manager of the company, Frederic de Courtois, who spoke from Paris. In this way Axa will become the first private subscriber of the new shares issued by Monte.
Yesterday an alert on the MPS case was launched by general secretary of Fabi, Lando Sileoni who, in an interview with Sportello Italia on Radio Rai Uno, said he expected the capital increase launched by Mps “It will be a thriller until the last second” given that, “In the agreement with the guarantee consortium, there are some important contractual clauses that allow the agreement to be terminated, in fact, at any time”, such as that relating to“The emergence or intensification of acts of hostility or acts of terrorism or other calamities or that relating to a negative change in exchange rates, in Italian and international politics, in the Italian and international financial markets “.
In view of a possible M&A transaction with another bank after the capital increase, Sileoni also recalled that “During this type of operation there are those who, as usual, expect or he thinks that Mps can be bought with one euro, as happened in June 2017 with the two Venetian banks. Or, at this moment, there are those who intend to act as the white knight: two or three banks could take over Montepaschi, above all to cover their own shortage of capital or coverage deficit on non-performing loans, looking for to make them look like Mps “.
The number nuno of Fabi defined the situation of Monte dei Paschi di Siena “a bottomless hole, but for political responsibility, not for economic or financial responsibility “.
Mps capital increase: everything you need to know
The capital increase of Mps has a value of 2.5 billion euros. The details were provided by Monte dei Paschi di Siena last Thursday 13 October, after the river meeting of the board headed by the managing director Luigi Lovaglio, which concluded with an agreement between Mps and the banks of the underwriting company.
The capital increase involves the issue of 1,249,665,648 of newly issued ordinary shares, at the subscription price of € 2 for each new share “To be attributed entirely to capital, in the ratio of 374 new Shares for every three MPS shares held. The maximum equivalent value of the Offer will therefore be equal to Euro 2,499,331,296 “.
The subscription price “incorporates a discount of 7.79% compared to the theoretical price ex right (so-called Theoretical Ex Right Price -TERP) of the Mps shares, calculated according to current methods, on the basis of the official closing price of the Mps shares on 11 October 2022 ″.
L’operation is fully guaranteed with the agreements that MPS has managed to reach with the banks of the guarantee syndicate and the Algebris fund, who have guaranteed a subscription for a maximum value of 857 million euros.
The calendar of the Offer, reads the press release from Monte dei Paschi di Siena, “Provides that option rights, valid for the subscription of the New Shares (the ‘Option Rights’) are exercisable, under penalty of forfeiture, from 17 October 2022 to 31 October 2022, inclusive (the ‘Option Period’). The Option Rights will also be negotiable on Euronext Milan from 17 October 2022 to 25 October 2022, inclusive. The Option Rights not exercised by the end of the Option Period will be offered on Euronext Milan (the “Inoptato Auction”) on 1 November 2022 and 2 November 2022, unless the Option Rights have already been fully sold, pursuant to art. 2441, third paragraph, of the Civil Code. The Option Rights purchased during the Inoptate Auction must be exercised by November 3, 2022 ″.
Mps confirmed the commitment of the Mef major shareholder ad “Adhere to the (capital increase) operation in proportion to its shareholding in the capital (64.23%) for a maximum amount of € 1.606 billion “. Anima has announced that it will participate in the recapitalization of Monte dei Paschi di Siena with an intervention of 25 million euros. Another 200 million will be supplied by Axa.
Then there are the contributions ofFrench entrepreneur Denis Dumont (30 million), the Algebris collection by David Serra (20 million), the Tuscan Foundations, “Which will pay about 30 million, to be shared between CariFirenze (10), Fondazionde Mps (10), and CariLucca (5)”.