Monte dei Paschi in Italy, the world’s oldest bank, is on the verge of decline and collapse

Logo display of Monte dei Pas Kidisiena (MPS), the world’s oldest bank facing major recess in a planned merger in Siena, Italy on August 11, 2021. REUTERS / Jennifer Lorenzini

August 13, 2021

Milan (Reuters) – Four years after spending 5.4 billion euros ($ 6.3 billion) on bailouts, Rome is negotiating to sell Monte dei Paschi to UniCredit and cut a 64% stake in Tuscan Bank. ..

It is the chronology of important events in the recent history of Monte dei Paschi (MPS) and the epitome of the nightmare of the Italian banking sector.

November 2007 – Just months after a Spanish bank paid 6.6 billion euros to a regional lender in Italy, MPS bought Anton Veneta in Santander for 9 billion euros in cash.

January 2008 – MPS provides a € 5 billion rights issue, a € 1 billion convertible bond called Fresh 2008, a € 2 billion subordinated hybrid bond and a € 1.95 billion bridge loan. euros to finance Anton Veneta’s transactions. Has been announced.

March 2008 – The Bank of Italy, headed by Mario Draghi, approved the acquisition of Anton Veneta, subject to MPS reconstituting its capital.

March 2009 – MPS sold a special bond of 1.9 billion euros to the Italian Ministry of Finance to strengthen its finances.

July 2011 – MPS raised 2.15 billion euros as part of a capital increase ahead of the results of stress tests in Europe.

September 2011 – The Bank of Italy provides MPS with € 6 billion in emergency liquidity through repo operations as the eurozone sovereign debt crisis worsens.

December 2011 – The European Banking Authority set an MPS capital gap of € 3,267 million as part of a general recommendation to 71 lenders to increase their capital reserves.

February 2012 – MPS will reduce demand for capital by € 1 billion by converting hybrid capital products into equities.

March 2012 – MPS recorded a loss of 4.7 billion euros in 2011 after depreciating billions of goodwill on transactions involving Anton Veneta.

May 2012 – Italian police raided the MPS headquarters to determine if prosecutors misunderstood regulators over the Antonveneta acquisition.

June 2012 – MPS declares that it needs capital of 1.3 billion euros to comply with EBA recommendations.

June 2012 – MPS asked the Italian Treasury to subscribe an additional € 2 billion in special bonds.

October 2012 – Shareholders approve a € 1 billion share issue for new investors.

February 2013 – According to MPS, losses from three derivative transactions in 2006-09 amounted to € 730 million.

March 2013 – MPS lost 3.17 billion euros in 2012. This was affected by a sharp drop in the price of holding Italian government bonds.

March 2014 – MPS recorded a net loss of 1.44 billion euros in 2013.

June 2014 – MPS raises 5 billion euros as part of a significantly discounted capital increase and repays 3.1 billion euros to the State.

October 2014 – MPS scored the worst in stress tests across Europe with a capital shortage of € 2.1 billion.

October 2014 – The former chairman, managing director and director of the treasury of MPS was sentenced to three and a half years in prison after being convicted of deceptive regulatory charges.

November 2014 – MPS will raise up to 2.5 billion euros following stress test results.

June 2015 – MPS expanded its rights offering to raise € 3 billion in cash after recording a net loss of € 5.3 billion in 2014 due to record bad debt write-downs. The remaining 1.1 billion euros will be reimbursed for special bonds taken out by the State.

July 2016 – MPS announces new rights issue of 5 billion euros, getting rid of 28 billion euros of non-performing loans as stress tests of European banks show the decline and negative equity have the intention to do something.

December 2016 – MPS goes to the state for help with a precautionary capital increase plan after a failed cash appeal. The ECB has set the bank’s capital demand at € 8.8 billion.

July 2017 – After the ECB declares MPS solvent, the European Commission will clear the bailout at a cost of 5.4 billion euros in the state in exchange for a 68% stake. Individual investors will contribute 2.8 billion euros, for a total of 8.2 billion euros.

February 2018 – MPS will return to profitability in 2018, but says the updated forecast falls below the restructuring target agreed by the EU.

October 2018 – MPS finalized the largest non-performing loan securitization transaction in Europe, reducing non-performing loans by € 24 billion.

February 2020 – MPS recorded a loss of € 1 billion in 2019.

May 2020 – CEO Marco Morelli steps down and urges Rome to find an MPS partner as soon as possible. He will be replaced by Guido Bastierney with five star support.

August 2020 – Italy has secured 1.5 billion euros to support MPS in time for the privatization deadline in mid-2022.

October 2020 – MPS shareholders approve a state-sponsored plan to reduce bad loans to 4.3% of total loans. Italian stock will fall to 64% as the decree paves the way for its sale.

October 2020 – A Milan court convicted the former CEO and chairman of MPS for false accounting in a startling ruling that forced MPS to tighten its legal risk clause.

December 2020 – MPS says it needs up to € 2.5 billion in capital.

December 2020 – Italy approves tax incentives for bank mergers that will benefit MPS buyers for € 2.3 billion.

January 2021 – MPS says it will release the book to potential partners.

February 2021 – MPS recorded a loss of 1.69 billion euros in 2020.

April 2021 – Andrea Orcel becomes CEO of UniCredit.

July 2021 – UniCredit Italy finances purchase of MPS “Selected Parts” on eve of European bank stress test results show small bank capital wiped out in slump We have entered into exclusive negotiations with the ministry.

($ 1 = 0.8527 euros)

(Report by Valentina Za; edited by Alexander Smith)