Three months of close negotiations between Unicredit and the Treasury to get to the bottom of the Monte dei Paschi di Siena dossier complex. Yesterday, after days of indiscretions, the breaking of the table would come. The positions of the two parties were too distant and the conditions that Unicredit had given themselves were too stringent, and the same Ministry of the Treasury that of the bank of Siena found itself a shareholder with 64% after having prevented its default. The ministry would have judged the 7 billion recapitalization requested by Unicredit for the Sienese bank too punitive for taxpayers. The non-response of Prime Minister Mario Draghi on the possibility of reaching an agreement by the end of the month – I don’t know, he said in Brussels – he had somehow hinted at the criticisms. The ministry of Via XX Settembre had the goal of leaving MPS by the end of the year in line with the agreements made in 2017 in Brussels. It was the year of the 5.4 billion bailout.
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The bank led by Andrea Orcel chaired by the former Minister of Economy Pier Carlo Padoan had sat at the table at the end of July asking to take MPS without consuming own capital, absorbing only the good commercial part that would allow it to increase profits, with a trade union agreement on redundancies, without current and future impaired loans and with protection from lawsuits related to past management. To comply with these conditions, the estimated cost for the state would be around 7-8 billion, including capital increase, costs for 5-7 thousand redundancies and other charges. Too much for the public coffers, considering that the government has put on the plate – and just renewed until June 2022 – even 2.5 billion in tax breaks (the so-called Dta).
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In Parliament at the beginning of August, the Minister of Economy, Daniele Franco, had supported the sale to Unicredit but not at all costs for the state coffers.
The affirmation of the Democratic Party in the administrative vote of 3-4 October gave strength to the line indicated by the secretary Enrico Letta, elected deputy in the Tuscan city: protection of jobs, protection of the brand, heart of the bank in Siena, continuity of a public presence.
Not only on capital – a fundamental financial issue – but also on more social components such as the division of MPS and the fate of the brand, no agreement has been reached. D.in Cinquestelle, Lega and from the Democratic Party the line was no stew. But Orcel had no intention of taking over the non-commercial parts of Mps such as the central offices, which in Siena employs thousands of employees, the leasing and factoring activities, the IT center. To meet the requests of the potential buyer – the only one to have responded to the government’s appeal – the public companies Amco and Mcc were involved to detect non-performing loans and 200-300 branches excluded from Unicredit from the perimeter, but that was not enough.
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Now the Treasury will have to find a plan B, negotiating with the European Commission and the ECB longer times for privatization. The end date of 2021 is not peremptory; further compensatory measures, ie greater cost savings in the form of redundancies and branch closures, will be discussed with the competition led by Margrethe Vestager. It will probably start again from the stand-alone restructuring plan prepared at the beginning of the year by the CEO of Montepaschi Guido Bastianini, which already provided for a capital increase of 2.5 billion and 2,670 net redundancies. The state should subscribe at least its 64%. The market is also making assumptions about a possible zeroing of subordinated bonds (burden sharing) but for now there are no indications.
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Whatever happens, we will not accept staff cuts except through voluntary early retirement, we will oppose any attempt at social butchery by all means, said Fabi’s general secretary, Lando Maria Sileoni yesterday.
And Unicredit? Thursday presents the quarterly accounts and Orcel will explain his reasons to the market, where he enjoys great credibility. In November it will present the new industrial pine which should also include extraordinary operations: among the hypotheses circulating in these hours, a move on Banco Bpm or abroad.
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