Now Would Be ‘Crazy’ Time to Sell Monte Paschi, Italy’s Salvini Says
(Bloomberg) -- Italy’s Matteo Salvini called for a delay in the sale of Banca Monte dei Paschi di Siena SpA, saying going ahead now would undervalue the lender.
“Selling now would seem crazy to me, it would be selling it cheap,” Salvini -- leader of the anti-migrant League, the second-biggest force in Prime Minister Mario Draghi’s coalition -- told Bloomberg at his Rome office on Wednesday. “This is absolutely the worst moment.”
Under the previous administration, the Treasury pushed for a sale of Monte Paschi with sweeteners to UniCredit SpA. But the bank’s fate has divided political parties, with the Five Star Movement, the biggest group in Draghi’s alliance, long pushing to turn it into a state bank.
The government owns a stake of about 64% in Monte Paschi, and paid around 6.49 euros a share in July 2017 to bail out the world’s oldest bank. The stock has lost 80% of its value since then and was trading at 1.21 euros as of 2:30 p.m. in Milan, giving the lender a market value of just over 1.2 billion euros.
Salvini said one option that should be considered at some point is “a partnership with a stronger bank.” Government plans to dispose of its stake in Monte Paschi this year have been complicated by issues including weak capital levels, restructuring costs and mounting legal risks.
|Monte Paschi’s Fifth Straight Loss Further Erodes Capital Level|
|Italy Races to Take $12 Billion of Risk Off Monte Paschi’s Books|
|Monte Paschi Plan Envisages Profitability, Hundreds of Job Cuts|
Monte Paschi reported a fifth straight quarterly loss on Feb. 10 as it set aside additional funds for risks and charges and posted lower revenue. The net loss of 149.6 million euros ($178 million) pushed the total shortfall for this year to 1.69 billion euros.
The bank is asking regulators to approve a plan that foresees a merger with a peer as well as a potential 2.5 billion-euro capital increase to be completed in the third quarter. The bank warned that it may fall below its capital buffer requirements between the end of March and the completion of the capital boost.
The government has sought to make a potential deal with UniCredit more attractive with incentives including bolstering Monte Paschi’s capital strength, tax relief worth about 3 billion euros, taking 10 billion euros of legal risks off Paschi’s books and the disposing of about 15 billion euros of soured loans through the state-owned asset manager AMCO.
©2021 Bloomberg L.P.