On 30 June 2020 Monte dei Paschi di Siena issued a press release with which it formalized the establishment of a bad bank in which to bring your own impaired loans together. The AMCO specialist asset manager will acquire the credits in question.
The CDAs of the Sienese bank and AMCO have in fact approved what has been rumored for weeks, giving new strength to MPS. Rocca Salimbeni shares gained over 2% in just a few minutes at the opening of Piazza Affari.
MPS’s customers and, above all, investors have endured very hard years. There have been very strong reductions in the value of the security, forced capital increases, repeated drops in the rating, changes in management and investigations by the judiciary. The transaction made official today, however, can reassure markets and investors. So if you believed in this bank, you have secured your money.
The conditions
The deal will not be completed immediately, as the go-ahead from the ECB will be needed, which will have to assess its impacts. The Frankfurt technicians will express their opinion on the subject of capital solidity. We, at this moment, want to take care of understanding what the impacts will be for small savers and bank account holders. For shareholders, the main change will be the assignment of AMCO shares to replace the canceled MPS securities. These new shares will not be traded on any regulated market. From the point of view of the value of listed ordinary shares, the transaction provides excellent prospects, especially with a view to a possible merger. Small shareholders will not be obliged to exchange shares and will be able to choose to remain shareholders of the Tuscan Bank alone, avoiding unlisted securities whose risks we have talked about who.
The improvement in the Institute’s capital ratios is certainly excellent news for bondholders. In fact, we remind you that the capital strengthening of the issuer increases the value of its fixed income securities. The bank will therefore be able to reasonably issue new debt at lower rates, increasing the price of bonds issued in the darkest periods at higher rates.
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The protection of the Interbank Fund
The news is equally positive for account holders. The protection of the Interbank Fund on sums deposited up to 100,000 Euros previously limited their risk. Now they too are strengthened, both by the greater protection of their money, and because the bank will have more ease in financing customers. And it can do it at lower costs.
Precisely for this reason, we can say that this is good news also for the bank’s debtors. They will have greater ease in obtaining mortgages, financing and overdrafts. But also to renegotiate, thanks to the improvement of the funding capacity for the bank. In the face of this good news, we can finally say that if you believed in this bank, you have secured your money.
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