Italy: the rescue of the Monte dei Paschi bank compromised

STORY – Discussions between the Italian state and Unicredit for the takeover of the venerable bank have broken down.


End of the game or a bluff? The endless sinking of “the oldest bank in the world”, Monte dei Paschi di Sienna, alias MPS, is experiencing a resounding new episode that is shaking all Italian finance.

In July 2017, before contributing 5.4 billion to the MPS bank, the Italian state made a commitment vis-à-vis Europe to resell on the market before the end of 2021 its 68% to the private sector. In October 2020, he launched the process, trying to force the hand of Unicredit and its president, the French Jean-Pierre Mustier, who, the following month, had ended up leaving. Dramatic change this Sunday: the Treasury and Unicredit announce the failure of their negotiations.

On Monday, all four subordinated bonds issued by MPS collapsed in Milan as the cost of insurance on its debt soared. The market fears that a “precautionary recapitalization” of MPS by the state will sooner or later impose burden sharing.

The rebound is flattering the very future of MPS, this venerable bank

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