The wedding between Unicredit and Mps could be anticipated by a capital increase of up to 3 billion euros by the Sienese institute. According to the Bloomberg agency, the Treasury is working on the recapitalization as part of an operation that could follow the one that led, through a share exchange preceded by an increase, to the merger between Banco Popolare and Bpm. Meanwhile, the due diligence launched by Unicredit, which will continue in the next few days, it will produce an initial report on the progress of the work by the structures in place, aimed at photographing the state of health of the bank, its assets and its risks.
The doors not to be detected
Unicredit and the Mef (Ministry of Economy and Finance) have given themselves 40 days to negotiate, until the end of the first week of September, but the timing of the negotiation remains uncertain and an extension is a possible option. Some indiscretions report that within Unicredit the willingness to take over a large part of Mps is maturing, with the exclusion of about 150 branches mainly concentrated in Sicily and Puglia and destined to end up under the umbrella of Mcc (Mediocredito centrale).
The knot of the general management
The general management of Siena could instead fall within the perimeter, whose reconversion will be defined, but which will certainly have to undergo a significant loss of weight. Rumors that are not currently confirmed and clash with Orcel’s plan to minimize overlaps, even if reciprocal concessions have to be taken into account in the negotiation with the Mef.
The amount of the capital increase
As for the increase – the need for which was not in doubt but the amount remains uncertain – it will serve to strengthen Monte, supporting Unicredit’s request to take on it only in the context of a neutral operation on its capital position. On June 30, the bank led by Andrea Orcel was able to exhibit a fully loaded Cet1 muscle (the main indicator of capital strength) of 15.5% compared to Siena’s fragile 10.6%. The exact size of the recapitalization will depend on several unknowns: the outcome of the due diligence that Unicredit is conducting, the perimeter that will be recognized, the value that will be assigned and therefore the exchange between the shares. In addition to aligning the capital ratios of Siena with those of Unicredit, the increase should pay for the restructuring costs, mainly linked to the 5-7 thousand redundancies expected from the merger and which could fluctuate between 1 and 1.4 billion. The costs of the recapitalization, which the Treasury would like in option but which could find itself underwriting well over 64% if it does not convince minorities, will be added to the 2.2 billion tax bonus developed by the Mef.
Non-performing loans
Non-performing loans will then remain in the hands of the State (the recapitalization could cost the increase in adjustments to 4.2 billion npl and utp, 48% covered) and extraordinary legal risks – those related to incorrect information to the market between 2008 and 2015 – which fell to 1.9 billion euros after the transaction with the Mps Foundation, while the remaining 4 billion belonging to ordinary banking activities – in any case to be adequately covered – should remain within the scope. For an overall account that analysts estimate at at least 6 billion and which also hovers the uncertainty about the termination of the joint venture with Axa, which could cost over a billion.
The role of the Treasury
Upon completion of the transaction, the Treasury should find itself a Unicredit shareholder with a stake without voting rights so as not to interfere in the governance of the institution and not to disturb the market. The Minister of the Treasury, Daniele Franco, in Parliament, reassured that the operation will not be a “sale” and promised maximum commitment to protect the occupation, the Sienese territory – where in October the secretary of the Pd Enrico Letta plays the election in Parliament – and the brand of the oldest bank in the world.
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