Mps capital increase increasingly uncertain, now it is learned that the 2.5 billion recapitalization operation that should save the bank could slip again, while panic burden sharing increases, so much so that some subordinated bonds, reports Milano Finanza, yield up to 311%. Meanwhile, the CEO of Banco BPM Giuseppe Castagna he again clarified his position towards the Sienese bank, drowning the last hopes of an intervention by Piazza Meda in the guise of a hypothetical white knight, perhaps together with other institutions:
“I think they are working both in the bank and in the Ministry to find a satisfactory solution. In this case it seems to me that there is collaboration with Europe. We wish Montepaschi our best wishes “, Castagna said, reiterating that, in any case, Mps “It has never been on Banco Bpm’s radar”.
We, continued the CEO of Banco BPM, “We have always said that it was complicated for a bank like ours, which already comes from a complex merger that we have successfully overcome, to be committed in such a complicated operation “.
Mps: sell sui bond con allarme burden sharing
Meanwhile, Milano Finanza reports that, in addition to the title, that in Piazza Affari has slipped up to about -6%, “Monte’s subordinated bonds also travel under stress, the most liquid one, for example, the 750 million euro issue maturing in 2028, now yields 311% on the call (18 January 2023) to indicate the tension on the market. Bonds that would be cleared if the bankin the absence of a capital increase, it should be saved with public money (in the case of burden sharing, the bonds would be transformed into capital as happened in the 2017 bailout) “.
LAWS Mps: first shock that brings Giorgia Meloni and FdI back to reality. The note from Germany
Mps, capital increase in the balance: 900 mln wanted
As has been known for several days, the institute headed by CEO Luigi Lovaglio is encountering quite a few difficulties in finding 900 million euros of private capital, necessary for the success of the capital increase.
Mef, the main shareholder with a 64% stake, will contribute with 1.6 billion euros, on the total 2.5 billion of fresh vehicles that Monte needs. But none of the private individuals is pawing to participate in the operation, so much so that yesterday rumors circulated about the contacts that the Treasury would have initiated with various banks and insurance companies, including high-sounding names such as UniCredit, Intesa and Generali, to convince them to create a system consortium and each contribute a share to the rescue of Monte dei Paschi.
Capital increase, MPS also contacts hedge funds
Today further rumors arrive which seem to sanction the desperate situation of Siena.
Mf reports that “Contacts are also in progress with Italian and foreign investment funds, in particular with those who hold (or have had in their stomachs) subordinate bonds of Mps including Melqart, Pinko, AcomeA, Amundi, Algebris of Davide Serra.
“Mps focuses on hedge funds”, is the title of the MF article, which recalls the other alert that was triggered in the last few days: that of burden sharing in the event of a flop of the capital increase. A hypothesis that, if materialized, would zero the value of those bonds.
All this, while the banks of the placement guarantee syndicate would be close to losing patience.
LAWS
Mps and the capital increase, guarantee consortium banks want Anima and Axa: no concrete commitment from the market
In addition to the 1.6 billion euros of the Treasury, the aforementioned banks would like to be certain that private accessions were equal to at least 600 million, while, Mf still reports, the adhesions would stop at 350 million.
There is therefore the risk, feared for several weeks already, that the banks of the underwriting syndicate will throw in the towel, giving up the CEO Lovaglio and Mps.
Not for nothing always the underwriting syndicate banks they had expressed the desire to postpone the operation al 2023.
Yesterday the matter was discussed in Rome, with the ceo Lovaglio, the banks of the guarantee consortium and the representatives of the Treasury who met to review the dossier. The specter of burden sharing would be cornering the Mef, which would have set to work to convince the other Italian banks to bail out yet another institution considered by now zombies, whose capital increase does not seem to be able to attract the market .
The negotiations between Lovaglio and the industrial partners of Mps, The soul is the Axis, would have led to a commitment by the second to participate in the recapitalization with approximately € 150 million. Anima could pay around 150 million, however in exchange for a revision of the distribution agreements, a factor that would not be frowned upon by Lovaglio.
Equita SIM yesterday pointed out that “In relation to subordinated securities, at current prices the market currently discounts burden sharing as the most probable scenario with the involvement of the securities that would be converted for an amount equal to the capital increase, ex-quota of the MEF, of approximately 900 million “.
In short, if the shareholders were shaking before, now the bondholders are also shaking, in particular the holders of subordinated bonds.
Moreover the ‘burden sharing’ solution would be part of the ECB supervisory plan, ready to intervene in the event of a flop of the capital increase.
So ccomment and summarize today from Equita SIM:
“During the day yesterday in Rome the meetings between the MEF, CEO Lovaglio and bank representatives of the consortium who expressed doubts on the granting of the guarantee on the entire unexercised increase (currently seen according to rumors in the 600mn area). According to some press articles, these interlocutions could lead to a revision of the roadmap of the operation, which today provides for the start of the increase for October 17 and closing in mid-November, with at the table the hypothesis of splitting the transaction of capital strengthening in two tranches “.
In the note from Equita SIM, reference is also made to the rumors of MF:
“As reported by MF, the hypothesis of system intervention by the main Italian financial institutions seems to coolwhich therefore would hardly act as anchor investors alongside Axa and Anima (the latter still in negotiations for the revision of the distribution agreement, a necessary condition for intervention in the capital of Mps), while support could be provided by of the funds that hold the subordinated securities “.
Regarding the burden sharing nightmare, “The valuations of subordinated securities currently discount the hypothesis of and involvement in the capital increase with a conversion / write-down of approximately 40-45% of the securities which represents an amount of just under 900mn that the bank should collect from the market “.
Then there is the problem of tight deadlines, indeed very tight, given that after November the Italian rules that allow employees to retire at a lower age than the retirement age expire up to 7 years. And that Lovaglio himself had spoken of burning times for the launch of the 2.5 billion capital increase.
“More than a third of the capital increase of 2.5 billion by Banca Mps is used for voluntary staff redundancies “, said the CEO, focusing onurgency of the recapitalization of Mps, after the green light of the extraordinary shareholders’ meeting. But the problem is that the money cannot be found. And that the largest Treasury shareholder of Monte di Stato is again in trouble.