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World Monte Paschi Ex-Managers’ Conviction Complicates Italy Exit Plan

16:35  18 october  2020
16:35  18 october  2020 Source:   bloomberg.com

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Italy must present the European Commission with a plan for its exit from lender Monte dei Paschi (BMPS.MI) by 2019, Chief Executive Marco Morelli told daily Corriere Last year, the Commission and Italy reached a pact on a state bailout for Monte dei Paschi that included heavy cost cuts

A rescue plan for Italian bank Monte dei Paschi will not be modified following the resignation on Thursday of its boss, the country's economy minister said on "I am convinced that the appointment of a new chief executive officer (..) will strengthen the plan and will not modify it," Pier Carlo Padoan told

(Bloomberg) -- Italy’s plan to sell bailed-out lender Banca Monte dei Paschi di Siena SpA got more complicated with the convictions of its former chairman and chief executive for false accounting and market manipulation.

a person standing in front of a building: A pedestrian passes a Banca Monte dei Paschi di Siena SpA bank branch in Rome, Italy. © Bloomberg A pedestrian passes a Banca Monte dei Paschi di Siena SpA bank branch in Rome, Italy.

The sentence landed just as the Italian government was seeking to take advantage of the current wave of consolidation in the financial sector to sell its majority stake in the bank ahead of a European Union deadline at the end of next year.

The verdict of a Milan first-instance court, which ordered Alessandro Profumo and Fabrizio Viola to serve a sentence of six years, has increased the chance that at least part of around 10 billion euros ($12 billion) in legal risks will eventually materialize. This raises the cost of the sweeteners that pandemic-stricken Italy will have to offer investors.

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Monte dei Paschi , the country's fourth largest bank, is now 68 percent owned by the government and under the bailout deal, Italy is due to exit the troubled lender Morelli said the lender was "on the right track" and was pressing ahead with its industrial plan , respecting the commitments that both Italy and

Monte Dei Paschi di Siena (MPS) CEO Fabrizio Viola attends a FABI meeting in Milan, Italy , February 12, 2016. Monte dei Paschi said on Thursday that CEO Fabrizio Viola had agreed to step down and a replacement would be found quickly, as the bank readies its third cash call in as many years and a

After years of restructuring and slumping profits, the world’s oldest lender may struggle to withstand the pandemic’s impact on companies and credit. Civil and criminal cases related to its former management have dogged the lender since the rescue and legal risk is seen as a potential impediment to any deal that make take the bank out of government hands.

Monte Paschi said in its last 6 month report that risks linked to disputes and legal cases rose at about 10 billion euros, for which it has set aside only a small portion of funds, as only a bunch of them are considered “likely to happen.”

To solve the problem, the administration of Prime Minister Giuseppe Conte has identified UniCredit SpA as a potential buyer who could be persuaded to overlook Paschi’s many woes. Spokesmen for Monte dei Paschi and Unicredit declined to comment.

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Another year, another conviction for yet another set of former managers of the world’s oldest bank. From afar, the Byzantine tale of Banca Monte dei Consider the latest case. On Thursday, Paschi ’s former chairman Alessandro Profumo and ex -Chief Executive Officer Fabrizio Viola were convicted

Italy 's Supreme Court acquitted three former managers at bank Monte dei Paschi di Siena who had ROME (Reuters) - Italy ’s Supreme Court acquitted three former managers at bank Monte dei The Tuscan bank was bailed out by the state in 2017 under an 8 billion euro rescue plan which handed

New Chairman

The appointmentof Pier Carlo Padoan, Italy’s finance minister between 2014-2018, as UniCredit’s next chairman was aimed at smoothing the path toward a takeover, according to Italian media. Instead, it sparked a political firestorm.

Read More: UniCredit Set to Name Ex-Finance Minister Padoan as Chairman

Several senators in the Five Star party, a member of Conte’s fractious government coalition with the Democratic Party, dubbed Padoan’s appointment “a macroscopic conflict of interest.” Padoan was appointed director of UniCredit Oct. 13 and is designated to be named chairman for the 2021-2023 term.

In 2017, when he was finance minister, Padoan engineered the state-financed bailout of Paschi, which is now 68% owned by Italy, promising European authorities the state would exit the bank by next year. Finance Minister Roberto Gualtieri recently confirmed that goal saying the state wants to save the bank, not break it up. Following this week news, the treasury expects to continue the sale as planned, according to an official who asked not to be named in line with an internal policy.

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The Italian government’s exit strategy from Banca Monte dei Paschi di Siena SpA will be driven by the industrial perspective of the world’s oldest bank, according to Finance Minister Pier He spoke Sept. 3 with Bloomberg Television's Flavia Rotondi on the sidelines of the Ambrosetti Forum in Cernobbio, Italy .

Ex -Deutsche Bank and Nomura staff sentenced in Milan alongside former managers at Italian bank. Thirteen former bankers from Monte dei Paschi di Siena, Nomura and Deutsche Bank were sentenced to jail on Friday after a case that shook Italy ’s establishment and fomented the rise of populism in the

Padoan, a Democrat lawmaker, said he will resign from Parliament to fully concentrate on his new role at Unicredit, sparking further tension inside the fragile government coalition.

In the face of mounting criticism, several leading Italian figures, including European Economic Affairs Commissioner Paolo Gentiloni, took the unusual step of publicly endorsing Padoan for his new, private sector job. Padoan was finance minister when Gentiloni was Italian prime minister in 2016-18.

Buying Paschi

Even with Padoan as chairman, it is not a given that UniCredit will decide to buy Paschi from Italy.

Chief Executive Officer Jean Pierre Mustier has said the Milan-based lender isn’t interested in mergers or acquisitions. But pressure is mounting on UniCredit to act after rival Intesa Sanpaolo SpA added scale in Italy with the acquisition of UBI Banca SpA.

Read More: Europe’s Long-Awaited Wave of Bank M&A Starts to Reshape Sector

UniCredit executives have held informal contacts with the government over a possible combination, people familiar with the matter have said. Still, the bank has made it clear it won’t consider a deal that isn’t at least capital neutral and that doesn’t shield it from the legal risks, the people have said.

Those uncertainties have become more concrete after the initial conviction of Profumo and Viola. Lawyers representing the defendants said they will present appeal against the sentence. A sentence in Italy is definitive only after a third judgment.

That leaves the state, which has already committed more than 5 billion euros to the bank’s rescue so far, in the uncomfortable position of having to provide that shield at a cost of several more billions of euros just when it needs every euro to shore up the economy against the impact of coronavirus.

At least, there is a precedent for the state aid. In 2017 the Treasury agreed to guarantee up to 12 billion euros to cover the legal risks and bad loans of two failing Veneto-based banks taken over by Intesa Sanpaolo -- and all for the symbolic price of 1 euro.

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