Mps closed 2020 with a loss of 1.689 billion euros, a red that is added to the -1.033 billion recorded in 2019. And the prospects are not clear: as explained by the institute led by Guido Bastianini and chaired by Patrizia Grieco, yes he is looking for a structural solution but in any case there is the Treasury’s support for the 2.5 billion euro increase, although the game is not yet in place with Brussels and the ECB, in short, there is still “uncertainty”.
A note reads that the bank’s accounts were affected by negative non-operating components for 1,305 million including, among other things, 984 million of provisions for risks and charges – also to address the impact of future customer defaults on due to Covid – and 154 million of restructuring charges related to the sale of impaired loans to Amco (Hydra operation) and the staff leaving in the fourth quarter of 2020. Loan adjustments amounted to 748 million, of which 348 million resulting from the effects of Covid-19.
However, the bank is now cleared of non-performing loans. Following the sale of the NPLs to Amco, a company wholly owned by the Treasury, at the end of 2020 the gross impaired loans of Mps amounted to 4.3% of total loans, from 12.4% at the end of 2019. But the cleaning of more 8 billion npl and the losses of the year weakened the bank’s capital position. The Common Equity Tier 1 Ratio, the main indicator of capital solidity, fell from 14.7% at the end of 2019 to 12.1%, while the Total Capital Ratio fell from 16.7% to 15.7%.
In any case, the CEO Bastianini specified in conference call with analysts, “all the indicators” relating to capital “are above the regulatory minimums” and “above the numbers we would have expected only a few weeks ago”. The fully loaded Cet1 (fully operational) of Mps stood at 9.9% at the end of the year, compared to the 8.74% requested by the ECB.
In the event that MPS fails to find a partner with which to aggregate, the Italian state has guaranteed “full support” for the pro-quota subscription of the 2.5 billion capital increase that the bank would have to carry out. However, the capital strengthening of 2.5 billion envisaged this year by Monte dei Paschi “discounts certain uncertainties as it requires the conclusion of the process already started for the evaluation and approval of DG Comp and ECB”. The 2.5 billion euro recapitalization, the bank recalls, is envisaged in the event that “the realization of a structural solution (or the aggregation, for which Unicredit is given as a candidate, ed) should not take place in the short to medium term “. As a function of an aggregation, Mps recalls, only the Apollo fund presented itself for access to the data room.