Banca Montepaschi is said to be targeted by private equity funds managed by Bain, Fortress and Apollo, MF Milano Finanza newspaper reported, adding that in recent weeks the funds are studying the dossier together with the institutional counterparties involved. A business bank is lso said to have submitted the potential deal to a Middle Eastern sovereign fund.
The interest of the funds is also due to the announced exit of the Italian Treasury Ministry from its investment in MPS, which must take place by 2021. The Italian Government controls the bank with a 68% stake since 2017, after having rescued Mps from defaulting. Precisely in view of the sale of the bank the Treasury Ministry has been discussing with the European Commission for some moths the sale to AMCO (formerly SGA) of as much as 10 billion euros of impaired loans (see here a previous article by BeBeez). The Treasury must communicate to Brussels by December (even if an extension is not excluded) how it intends to proceed for the disposal of its stake in the bank’s capital.
Talks between the government and the Dg Competition of the European Commission are said to be concentrated on the possible split of Monte dei Paschi between a bad bank destined to receive and manage the non-performing loans remaining on the balance sheet and a good bank that would be quickly put on the market. As for the price for the sale of the receivables, the Commission would like them to be sold at market level, but if price was too far from those of the book, the bank would risk reducing the capital requirements under the regulatory minimums, making a new recapitalization necessary. At the end of September Mps was still the bank with the highest gross NPE ratio among the seven major Italian groups with a ratio of 14.64% (albeit in a sharp decline from 16.3% at the end of June) and a gross NPL ratio ( non-performing loans / total receivables) of 8.18% (this was also down from 8.51% in June), versus an average of seven banks of 8.95% (from 9.93% at the end of June) for gross NPE and an average of 4.71% (from 5.34%) for gross NPL (for details on the credit quality of the seven biggest Italian banks at the end of September, BeBeez News Premium subscribers can read BeBeez’s Insight View here, discover here how to subscribe for only 20 euros a month). An alternative to the split between bad bank and good bank could be the merger of Mps with an Italian bank; in this case, the candidates are said to be Ubi Banca, Banco Bpm and Bper.
Finally, we remind that various funds, including Apollo, Varde, Cerberus, Partners Group, Starwood, Bain Capital, Oaktree and Lone Star, are also interested in the instrumental properties of Mps. The sales process is now entering the final phase and the formalization of the binding offers by a limited number of participants is expected by the end of November, while the closing of the procedure is expected by the date of publication of the 2019 financial statement results (see here a previous article by BeBeez).