EXCLUSIVE Italy abandons insurance plan for MPS legal risks, considers spin-off – sources


  • Government under pressure to find solution for state-owned MPS
  • Some ruling parties oppose Treasury re-deprivation plans
  • Insurance plan too expensive for the bank – sources
  • The spin-off plan must be approved by the EU authorities

ROME, July 26 (Reuters) – Italy’s Treasury is considering plan to part with most of the legal risks to Monte dei Paschi (BMPS.MI) after scrapping an overpriced alternative insurance scheme, three sources said folder .

Legal risks of around € 10 billion have long been one of the main obstacles to Italy’s efforts to reduce the state’s 64% stake in Monte dei Paschi (MPS) after a bailout in 2017.

The absence of a firm solution to the legal problems threatens to further prolong the Treasury’s struggle to put the MPS back into private hands.

Prime Minister Mario Draghi’s government is under pressure to find a solution for MPS, which needs more capital just four years after its € 5.4 billion bailout.

After months of tense negotiations, MPS last week signed a draft agreement with its former main investor, the local banking foundation Fondazione Monte dei Paschi, to settle their pending legal disputes.

The landmark deal will reduce claims by 3.8 billion euros. The Treasury is working to further reduce the remaining legal risks below 5 billion euros, sources said. Read more

But even after reducing claims, the three sources said a program the Treasury has been working on for months to allow MPS to insure its legal risks and make it easier to find a buyer is too costly for the finances. weakened Tuscan bank. Read more

Under this scheme, the state export insurance agency SACE and other private actors would have provided risk protection against payment of royalties. Read more

However, the regime also failed to address another key issue: the joint liability of MPS and its acquirer would remain subject to Italian law vis-à-vis potential plaintiffs.

The Treasury has now revived an earlier plan that involved removing legal risks from MPS and keeping them in state hands, a move that requires approval from European Union competition authorities, the officials said. sources.

Discussions are still preliminary and a decision on how to proceed can only be made with agreement with the buyer of MPS, one of the sources said, adding that if Rome opted for the spin-off project, it would be would be a long and complex process.

MPS declined to comment.

The Treasury has tried to convince UniCredit (CRDI.MI) to take on its struggling rival, but Italy’s No.2 bank is focused on an internal overhaul under the leadership of new CEO Andrea Orcel.

Friday’s bank stress test results are expected to highlight MPS’s vulnerability, although a person familiar with the matter said capital needs should not exceed the € 2.5 billion that MPS has already announced. its intention to lift by mid-2022.

The government is facing calls to delay the sale by the co-leader 5 Star Movement and the right-wing League party, lawmakers say.

Union representatives staged a protest in Rome on Monday calling for guarantees for MPS workers.

On Tuesday, Deputy Minister of the Economy Laura Castelli will speak on plans to reprivatize the Treasury before a parliamentary committee investigating the banking system under the leadership of 5-star MP Carla Ruocco.

The Treasury is working with Bank of America and Orrick to reprivatize MPS. Mediobanca and Credit Suisse advise MPS.

Report by Giuseppe Fonte in Rome and Valentina Za in Milan; Editing by Giles Elgood

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