The Italian bank Banca Monte Paschi di Siena (MPS) sank today on the Milan Stock Exchange after an eventful session that coincided with the first day of its capital increase of 5,000 million euros, with the which seeks to avoid public rescue.
In the Milanese market, all eyes were on the evolution of the MPS, which suffered several suspensions in its price due to its high volatility precisely on the day on which it began its capital increase, included in its reorganization plans.
Finally, the shares of the entity suffered the greatest fall of all the selective and depreciated 11.04%, in a new black day for a bank that has lost 84.61% of its value this year.
Its stock performance was important to test the confidence of the markets in the extension “express” that MPS has released on Monday for an amount of 5,000 million and will come to an end on Thursday, provided no extensions are requested.
35% of the expansion is intended for shareholders and the Italian market, which may only join until Wednesday, while the remaining 65% has been offered to national and foreign institutional investors.
In the latter case, in the case of raising capital among institutional investors, the deadline to join will end on Thursday, December 22 at 2:00 pm local time (13.00 GMT), which fixes the end of the operation as a whole.
The objective is to alleviate the financial position and recapitalize MPS without resorting to the public rescue and, for this, the Tuscan bank is going through two parallel paths: the capital increase and the voluntary conversion of debt subordinated by shares.
This last operation will conclude on Wednesday and is aimed mainly at the 40,000 small savers who have debt for a value of 2,000 million and who, if they accept the exchange, would go from owning fixed-income bonds to shares.
MPS already collected 1,057 million euros in a first conversion at the end of November and now, with the permission of the CONSOB regulator, has opened a second one to small investors, which has been criticized by some consumer associations, which consider it “an blackmail”.
This second conversion will conclude on Wednesday and it will be then when the amount that MPS has been able to harvest is known.
In this way, the bank has based its stability, on the one hand, on its shareholders and small savers and, on the other, on the search for support from large investors such as the sovereign fund of Qatar, which would be willing to invest around a billion of euros.
However, Gulf investors apparently still meditate whether to enter MPS, after backing down in the climate of political instability that followed the defeat of the prime minister Matteo Renzi in the referendum, which led to his resignation on March 7. December.
MPS today held a board of directors to follow the evolution of the capital increase and the president of the bank, Alessandro Falciai, told the media that “everything proceeds as planned,” without giving further details.
In case these operations fail to collect the 5,000 million euros
the specialized press advances that then the Government would proceed to inject public money in order to stabilize the entity and prevent affecting the entire sector of Italy, the third economy of the euro.
The public rescue could also lead to losses for its shareholders, due to the regulations in force in the European Union (EU) since this year, which states that before resorting to the money of the State, the creditors and shareholders are the ones who assume the losses.
The situation of the MPS concerns Italy and also Europe, as it raises doubts about the solvency of the country’s banking system, which accumulates a default of 360,000 million euros, according to figures provided by the Ministry of Economy.
The European Central Bank (ECB) defines these assets as non-performing loans for more than 90 days, which reduces revenues to the entities by not receiving interest benefits while preventing the granting of new loans.
One of the main problems of MPS is its bulky portfolio of delinquent loans, which stands at around 27,700 million euros gross, and to address this situation is expected to be a session, for which is waiting to know the role that will play the “bank bad “Italian,” Atlante. ”
An operation that, together with the capital increase in progress, plays a decisive role in the stability of MPS, the third largest bank in the country.