Of all this year’s banking sector rights issues, only one stands out as being done for the right reasons. Italy’s Banca Monte dei Paschi di Siena raised nearly €5bn in equity from existing shareholders, not to repair its balance sheet, but to fund a strategically important acquisition. That may account for its unqualified success.
At the start of last November, in the wake of the consortium takeover of ABN AMRO, Banco Santander sold Banca Antonveneta – part of the spoils – to Monte dei Paschi (MPS), even before the ABN AMRO deal had closed. MPS snatched its prize from under the noses of other interested parties by paying the fullest of prices. The €9bn consideration was almost equal to the Siennese bank’s entire market capitalisation.