Monte dei Paschi di Siena needs some love. Like a bachelor going stag to a New Year's party, the troubled Italian bank has until the clock strikes midnight, January 1, to find a willing partner. But MPS isn't its old self. Bloated with bad debts and wheezing under the weight of ECB mandates, the bank isn't exactly a hot commodity these days.
Now the outlook for MPS is getting even grimmer. So far, a share offering intended to raise capital for the bank has “failed to find buyers,” Reuters reports. And a deal to offload some of its 28 billion euros in bad loans looks like it might also be on the rocks. From the FT:
A last-ditch attempt by Monte dei Paschi di Siena, the struggling Italian bank, to raise up to €5bn in capital was thrown into doubt after the country’s private bank rescue fund expressed “strong reservations” over the terms of a bridge loan that is key to the deal.
On Monday, MPS said in a statement that it was “in contact” with Quaestio Capital Management — which manages the Atlante 2 bank rescue fund — “to identify possible solutions” to the disagreement over the bridge loan.
The Italian bank warned if it failed to reach an agreement with Quaestio it would miss the December 31 deadline for the completion of the planned recapitalisation set by the European Central Bank.
It seems like the oldest bank in the world is in the midst of the oldest story in the world: spurned love. Specifically, we're watching the final few scenes before the main character commits a melodramatic act of suicide.
How the end will come remains in question, however. Potential suitors apparently don't like the bridge loan MPS got from the banks JPMorgan, Mediobanca, Credit Suisse and HSBC. Quaestio in particular is upset that the bridge loan is secured by the very same bad debts – around 9 billion euros worth – that the loan was arranged to help offload.
If the market doesn't do MPS in, politics might. In the increasingly anti-establishment, Euro-skeptic environment of Italian politics, a taxpayer-funded bailout would be a no-go. The Five Star Movement – a party co-founded by an internet comedian has risen to become the second-most popular party in the country – even advocates for the nationalization of MPS.
In the era of Brexit and Trump, stranger things have happened.