Monte dei Paschi di Siena blocks the capital increase of 2.5 billion euros, obtaining the guarantee of the banks on the unopted, and sets the terms of the recapitalization, which will arrive on the market next Monday: 2 euros for each new share, with an issue ratio of 374 for every 3 outstanding securities. However, the hyper-dilutive nature of the increase caused the stock to crash (-33%), while subordinated bonds were unleashed, from whose horizon the risk of burden sharing disappears. The board approved the downstream conditions of a two-day negotiation marathon, with the eight banks of the guarantee consortium asking for written commitments from investors in order to avoid the risk, amplified by the difficult market environment, of having to take on a large slice of unopted. Eventually Bofa, Citi, Credit Suisse, Mediobanca, Barclays, Santander, SocGen and Stifel will guarantee 807 million, 50 will be covered by Algebris, while on another 37 there is the commitment of some investors. Full coverage of the increase is ensured by the € 1.606 billion that the Treasury has promised to pay, out of its 64.2% stake. Banks have relieved themselves of more than half of the risk of the part of the ‘market’ increase thanks to the underwriting commitments received by some investors, led by the French insurance company Axa, which will defend the partnership in bancassurance with 200 million, and the transalpine entrepreneur Denis Dumont – like Algebris who was already Lovaglio’s travel companion at the time of Creval – who will contribute 30 million. Among those who intervened in support of the Monte are the Tuscan foundations, with about thirty million, of which 10 paid by the MPS Foundation, as well as a series of funds, such as Bluebay, Pimco and Melqart, exposed on subordinates. A board of directors of Anima, a partner in managed savings, is expected to approve an intervention of 25 million in the evening, while the Hosking fund could enter with an increase in progress. “The future of the oldest bank in the world begins today, it is a great day for our territory”, commented the mayor of Siena, Luigi De Mossi. “Great satisfaction” also on the part of the MPS Foundation, according to which the closing of the increase “is certainly the result of the tenacity, as well as the professionalism of the entire management of the bank”.
The transaction, which is only awaiting Consob’s authorization for the publication of the prospectus, will start next Monday and end on 3 November. The option rights, which can be traded on the stock exchange until October 25, can be exercised until October 31, with the remainder being auctioned. Mps, after a tear to the upside at the start of the session, began to sink in the stock market, to close with a thud of 33%, at 17.1 euros, while its four subordinated bonds recorded increases of between 32 and 40% , after tearing up to 50%. The decrease in shares was affected by the hyper-dilutive nature of the operation, which will reduce the incidence of shares in circulation to 0.8% of the new capital, including those for which the Mef in 2017 paid out 5.4 billion of public money. In order to mitigate the price anomalies typical of hyper-diluting transactions during the increase, the rolling method will be applied, which provides for the delivery of the new shares upon subscription of the rights. The launch of the increase represents a success for the CEO Luigi Lovaglio, who managed to close the transaction in the context of a horrible market and despite the negative track record of Mps, which since 2011 has burned 18.5 billion euros on the stock market. euro of increases and accumulated 23 billion euro of losses. The banks of the consortium compare the operation to the ipo of a ‘new Monte’, cleansed of NPLs, relieved of costs and ready to benefit from the rate hike and the prospect of M&A even if some legacies of the past, such as legal risks , still stretch their shadows over Siena
