Italy’s government privatizes Monte dei Paschi

Italy’s government privatizes Monte dei Paschi

Dhe oldest bank in the world, founded in Siena in 1472, was for a long time a bottomless pit into which the Italian state let billions of euros disappear. Today, however, Banca Monte dei Paschi di Siena (MPS) is doing better again. Therefore, the Italian government is in a position to divest itself of its majority stake. As the Ministry of Economy and Finance in Rome announced on Monday evening, it is selling 25 percent of the capital on the stock exchange. The state share, which has been almost two thirds since 2017, has fallen below 40 percent. It is a historic turning point that gives the bank and the government hope for a sustainable recovery.

In October 2022, the bank was forced to carry out its seventh capital increase within 14 years. Of the 2.5 billion euros, which were primarily needed for the costs of workforce reductions, the state subscribed 1.6 billion euros. In the past, a failed expansion strategy was the main cause of the misery, which was primarily due to the takeover of the Italian bank Antonveneta for 9 billion euros in 2008. Various scandals involving irregularities arose. Years later, the EU Commission approved the state rescue, but after a transition period pushed for privatization.

Italy’s government takes in millions

In 2021, the Italian bank Unicredit was actually supposed to take over MPS, but it pulled out due to fears of legacy issues. The end of 2021 deadline set by the EU Commission for privatization passed without consequences. It is estimated that the Siena-based bank has accumulated losses of more than 20 billion euros over the past 14 years. Under CEO Luigi Lovaglio, who took office in February 2022, the clean-up work received a significant boost with staff cuts, branch closures, the disposal of bad loans and investments in digital.

No security was found!

The number of jobs shrank by more than 4,100 to fewer than 17,000 due to voluntary agreements. Also supported by the increased interest rates, MPS expects a net profit of more than 1.1 billion euros in the current financial year.

The share price, which is of course only a shadow of its former height, has recovered by 40 percent this year. On Tuesday, however, the stock lost around 8 percent by midday because investors were disappointed by the offer to sell the shares from the Italian state. On November 23rd, he sold a good 300,000 shares through a banking consortium for a price of 2.92 euros per share, which was below the price of a good 3 euros in the previous days. The offer was five times oversubscribed. The Italian government, which is faced with persistently high levels of public debt, will raise €920 million from the transaction.


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