The ongoing saga of the world's oldest bank, Monte dei Paschi di Siena (MPS), is a troubling one.
The Italian lender launched a €2.5bn rights issue on October 17 and there is a group of banks keen to underwrite the fundraising. The government is prepared to inject more money as part of the planned capital increase.
The capital is needed to strengthen the lender’s capital buffers and fund voluntary staff exits before moving forward with the bank’s privatisation. The lender was bailed out by the Italian government in 2017, when it was revealed the bank hid hundreds of millions of euros in losses between 2008 and 2012 using complex derivatives contracts. The Italian Treasury now holds a 64% stake in MPS.
Italy has been struggling to privatise MPS since its bailout five years ago. Last year, a deal with Milan-based UniCredit to take over MPS fell through.
Troubles at the Tuscan bank go back many years. Gross total loans have decreased dramatically in the past 13 years. They stood at $234bn in 2009 and shrank to $97bn at the end of last year. Total assets came down to $156bn from $323bn over the same period.
The bank is ranked 229th in The Banker’s latest Top 1000 World Banks ranking, falling 19 places since the previous ranking. It was ranked 74th in the world in 2004.
