all in one week. Lovaglio must find 400 million by Tuesday evening- Corriere.it

Compulsory path. Tight and forced. The most difficult week for Monte dei Paschi di Siena has begun, especially for its CEO, Luigi Lovaglio, who has been in the saddle since February and is grappling with a 2.5 billion euro capital increase destined to definitively change the face of the largest bank ancient in the world. For the better.

The unknowns on the table are different, but Lovaglio also worked over the weekend to arrive at a definitive square. There is no more time for skirmishes or tactical negotiations, from now on a binary logic is imposed: I know not? Numbers, as always, are important. The Italian government controls 64.23 percent of the Sienese bank and Alessandro Rivera, general manager of the Treasury, concretely supports the plan that Lovaglio is trying to implement. Rivera ready to write a check for 1,605,750,000 euros, which fully covers the portion of the capital in public hands. He cannot go up, exercising options on any unexercised, due to community constraints; does not want to get off. Therefore, just under 900 million euros are missing. The share of capital in the hands of the indistinct public of savers, according to Sienese rumors, is around 25 per cent of the capital. How these shareholders will behave will only be discovered when the increase is open and therefore, despite the strong diffusion of shares in Tuscany, it is not possible to count on the contribution of these shareholders in advance. Instead, specific commitments are needed.

Agreements

Banks that have signed up to pre-underwriting (Bank of America, Citi, Credit Suisse and Mediobanca) now (rightly) want to see more clearly and are asking for confirmation from the market. To take charge of any unexercised credit, the credit institutions in the predicate of setting up the guarantee consortium would like to see commitments signed for the purchase of at least half of the missing 900 million. Among the partners in the front row are the French insurers of Axa and the managed savings of Anima, also industrial partners of Mps. The crucial issue in Anima’s willingness to link participation in the increase to a review of the existing industrial agreements, while Lovaglio wants to keep his hands free in order to better manage, one day, the possible aggregation into another banking group that should complete the privatization plan of MPS with the simultaneous, or almost simultaneous exit of the Italian State from the capital.

Negotiation with Anima crucial. The State, through Poste (10.4 per cent), could also increase its weight in Anima, raising the barricades in defense of a possible operation of a competitor on the market (the French of Amundi?). And at that point Anima’s position on Mps should be further reviewed. But between leaps forward and lightning reverse, Axa and Anima could today put on the plate a figure close to 250 million euros. Not decisive, but important. About half of what the participating banks want to see. What about the rest? Lovaglio worked on this over the weekend. Denis Dumont, a French entrepreneur whom Lovaglio met at the time of the takeover of the Crdit Agricole on Credito Valtellinese, of which Dumont was a shareholder and Lovaglio ceo. Hosking’s English and Davide Serra’s Algebris Italian funds could participate in the operation. From these three poles Lovaglio expects to obtain fresh resources for the increase. Other suspects to participate are a couple of historical shareholders of Mps, the Monte dei Paschi di Siena Foundation and Generali Assicurazioni. They disappeared from stock market radars because they hold positions below the threshold of disclosure, could today put their hand to the wallet. There are two obvious limitations: the Sienese Foundation does not have the availability of a time, but in Siena they do not want to skimp on any chance to save the bank. The Generali option, on the other hand, should be seen in opposition to Axa. What will they do? If they wanted to guarantee an overall share of 2 per cent, they would bring about 50 million euros to the increase. Still little.

Good opportunity

To complete the work Lovaglio is looking for the availability of foundations and social security funds in these hectic hours. Because, the CEO is convinced, Monte dei Paschi can be a good investment opportunity in the medium term. But the stakes must be played now and in these hours the complexities are many: from the geopolitical landscape to the domestic frictions in view of the formation of the new government, from the increase in rates to the feared recession. The markets are nervous, volatility wins on the stock market. Many factors seem to play against it and in the meantime time is running out.

The key day Saturday 12 November: the proxy given by the shareholders’ meeting to the bank’s board of directors to conclude the transaction expires in one month. At that time everything must have been accomplished. Considering an extension of the increase period for three weeks, there are few alternatives as a starting date: the hugely popular 17 October or, as a residual frantic alternative, 24 October. Lovaglio, the government and many of the stakeholders they aim for 17 next Monday without delay. But to be able to open the operation on that date it takes a week as a sprinter. With the negotiations behind us, we have reached the moment of signing the commitments. Having obtained the constitution of the consortium, with signatures arriving even at the last moment, Monte dei Paschi will meet, in all probability tomorrow, Tuesday 11, the board of directors for the approval of the last fundamental details of the operation. The additions to the prospectus of the capital increase will be presented to Consob on Wednesday 12th, which the Commission will probably examine at the meeting of Thursday 13th, the last date to allow the capital increase to be opened on Monday 17th.

If everything goes smoothly, but the variables are still many, in a week Lovaglio will be able to breathe a partial sigh of relief. Much remains to be done, but the most important step will be taken. To get there, you need to find at least four hundred million euros by tomorrow and get the go-ahead from Consob, expected between Thursday and Friday. Five days as heavy as five years.

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