A troubled bank bows to the inevitable
FOR months, a bail-out had
seemed likely; for weeks, unavoidable. On December 23rd it became fact. Monte
dei Paschi di Siena, Italy’s third-largest bank and Europe’s most troubled,
announced it had requested state help. The European Central Bank (ECB), Monte
dei Paschi’s supervisor, had given it until the end of the year to find €5bn
($5.2bn) in equity, but the bank’s attempts to raise the money from the private
sector failed. Paolo Gentiloni, Italy’s new prime minister, said that “today
represents a turning-point [for the bank] and a reassurance for its depositors
and its future”.
That is the hope. The Tuscan
lender’s problems have been rumbling for years. In 2007 it ill-advisedly bought
Antonveneta, another Italian bank, from Spain’s Santander for €9bn in cash;
more tales of mismanagement have emerged since. Monte dei Paschi has already
had two state bail-outs, and raised €8bn from share issues in 2014 and 2015.
Its gross non-performing loans amount to one-third of its book. In this
summer’s European stress tests, it ranked 51st of 51 institutions. In the past
year its stockmarket value has fallen by 88%, to a piddling €440m. Some €14bn
in deposits were withdrawn in the first nine months of the year. This week, the
bank said that its €11bn of liquidity would last just four months.
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