Banca Monte dei Paschi di Siena
|Società per azioni|
|Traded as||BIT: BMPS|
|Fabrizio Viola (CEO), Alessandro Profumo (Chairman)|
|Products||Retail and investment banking, insurance, investment management|
|Revenue||€3.957 billion (2013)|
|(€1.677 billion) (2013)|
|Profit||(€1.439 billion) (2013)|
|Total assets||€199.106 billion (end 2013)|
|Total equity||€6.155 billion (end 2013)|
Number of employees
|Subsidiaries||MPS Finance, Banca Toscana|
Banca Monte dei Paschi di Siena S.p.A. (Italian pronunciation: [ˈbancaˈmonte dei ˈpaski di ˈsjɛːna]) (BMPS) is the oldest surviving bank in the world and Italy's third largest bank. Founded in 1472 by the magistrate of the city state of Siena, Italy, as a "mount of piety", it has been operating ever since. Today it has approximately 3,000 branches, 33,000 employees and 4.5 million customers in Italy, as well as branches and businesses abroad. A subsidiary, MPS Finance, handles investment banking. The bank's largest shareholder is the Fondazione Monte dei Paschi di Siena (although the foundation's share-holding has been below 50% since December 2009).
Banca Monte dei Paschi di Siena was founded by order of the Magistrature of the Republic of Siena as Monte di Pietà in 1472, when its statute was approved. Since then the bank has been in operation without interruption to the present day. It is therefore considered the oldest bank in the world still operating.
At the base of its foundation appears to be the "Statuto dei Paschi", written in 1419 for the regulation of all activities related to agriculture and pastoralism in Maremma.
Its current form dates from 1624, when Siena was incorporated in the Grand Duchy of Tuscany and the Grand Duke Ferdinando II granted to depositors of Monte, in their warranty, the income of the state-owned pastures of Maremma (the so-called "Paschi" which gave the bank its name). The bank consolidated and increased its banking activity during the 17th and 18th centuries.
In 1995, a decree law of the Ministry of the Treasury of the Italian Republic dated 8 August 1995, gives rise to two institutions: Banca Monte dei Paschi di Siena S.p.A and Fondazione Monte dei Paschi di Siena, a non-profit organization with the statutory purpose of providing assistance, charity and social utility in the fields of education, science, health and art, especially with reference to the city and the province of Siena.
On 25 June 1999, Banca Monte dei Paschi di Siena was listed successfully in the Italian Stock Exchange.
After its debut on the Italian Stock Exchange, the bank began an intense phase of commercial and operational expansion. The bank acquired some regional banks: Banca Agricola Mantovana and Banca del Salento. The bank had started a process to reinforcement of the structures of production in strategic market segments through the development of product companies:
- Consum.it in the sector of consumer credit
- MPS Leasing and Factoring in the parabanking sector
- MPS Finance in investment banking
- MP Asset Management SGR in managed savings
- MPS Banca Personale in financial promotion
- MPS Banca per l’Impresa in credit for businesses and corporate finance services
At the same time the bank upgraded its commercial productivity, with the aim of improving the level of assistance and consultancy to investors and businesses, and updated its activities in Private banking and in Private pension plans. At the conclusion of this plan of expansion the bank implemented a vast program of opening new branches of the Group, with more than 2,000 branches. In order to finance this expansion model the bank entered into some derivatives that were hidden: operations Santorini in 2002 and Alexandria in 2006.
Antonveneta acquisition (2006–08)
On 8 November 2007, Monte dei Paschi di Siena announced that it had reached an agreement with Banco Santander to buy Antonveneta for € 10.3 billion
excluding the subsidiary Interbanca that is owned by the Spanish bank. Antonveneta is the bank that after the Bancopoli scandal was acquired by ABN AMRO and was supposed to go to Banco Santander after the purchase of the Dutch bank by the consortium of RBS, Santander, Fortis.
Global financial crisis (2008–12)
In the wake of rising yields and declining valuations on Italian government debt in the European sovereign-debt crisis, MPS lost over $2 billion in the first half of 2012, had to recapitalize, and faced restructuring or worse. The majority owner until the recapitalization, the Fondazione Monte dei Paschi di Siena, long resisted issuing new capital which would dilute its holding. In September 2012, even after the dilution, the bank "appear[ed] poised" also to give the national government a greater ownership stake in return for more capital.
Hidden losses and Bank of Italy bailout (2013)
In 2009, the Santorini and Alessandria operations began creating huge losses. In order to hide them in the bank's financial statements, the top management, including Giuseppe Mussari, the bank president, chose to enter into derivative contracts with Deutsche Bank and Nomura.
Estimates of the losses accumulated by the Santorini and Alessandria operations in the period leading up to the derivative contracts range from €500 to €750 million. The documentation concerning these operations was never communicated to the bank's own auditors or the Banca d'Italia. The derivative contracts and related documentation were discovered and made public by the new board of the bank at the end of November 2012. The documentation was then forwarded to the Banca d'Italia between December 2012 and mid January 2013. The shareholders and the analysts have ascertained that the bank had not declared losses from derivatives. On 22 January 2013 the bank's shares lost 5.6% on the Stock Exchange and Mussari resigned as president of Associazione Bancaria Italiana.
On 23 January 2013, the scandal of the hidden derivatives was revealed. The bank's shares dropped 8.43% on the Stock Exchange.
On 24 January 2013, the bank's shares dropped another 8% on the Stock Exchange.
On 25 January 2013, an extraordinary general meeting of the shareholders of the bank was convened. They resolved to grant the Board of Directors the power to increase the share capital by a maximum amount of € 4.5 billion to service the exercise of conversion rights of the bank of the Monti Bonds. MPS called for an intervention of € 3.9 billion, including € 1.9 billion for the replacement of the previous Tremonti Bonds.
The delegation of the extraordinary powers to the Board of Directors has also included the possibility of increasing the share capital of € 2 billion at the exclusive service of the payment of interest payable in shares. The shareholders approved with a 98% vote in favour.
After the vote, the bank recovered 11.36% on the Stock Exchange after having lost more than 20% of its value in three sessions in three days.
On January 26, 2013, the Banca d'Italia (Bank of Italy) approved a bailout request from the bank for € 3.9 billion ($5.3 billion).
The firm sparked fresh controversy in 2013 when it was accused of misleading Italy's market regulator in October 2012, shortly before it received a 4.1-billion euro ($5.47 billion) state bailout.
On 29 December 2013, shareholders rejected plans for a 3 billion euro ($4 billion) share sale, delaying the raising of capital until at least May 2014 and increasing the risk of nationalization.
In March 2014, BlackRock acquired a 5.748 percent stake in the bank. In October, the bank failed the ECB's stress test of major European banks, and was given two weeks to raise $2.1 billion in shortfalls. Despite issuing $5 billion in shares just four months earlier, the bank was declared not able to withstand a financial catastrophe by the European Central Bank. Shares proceeded to plummet 22%. In November, 2014, the bank reported a loss of $971 million in the 3rd quarter of the year. On 6th July 2015 following the Greek bailout referendum trading in Monte dei Paschi shares was suspended after they fell 5.7%.
Cultural and economic-development
MPS headquarters in the Palazzo Salimbeni in Siena hosts an art collection and a large number of priceless historical documents spanning the centuries of its existence. However, this collection is not usually open to the public. Most recent publicly known acquisition of art, a gold-plated panel by Segna di Bonaventura, cost the bank nearly one million Euro. It is also internationally known as the primary sponsor of Italian basketball club Mens Sana Basket of Siena, currently in Lega A and a regular participant in the Euroleague.
In 2010, the bank was funding the expansion of a small airport in the heart of the Tuscan countryside, Siena-Ampugnano Airport, to become an international airport. Both international and local groups had raised objections to this expansion on the grounds it would damage the natural beauty of the area, the environment and the attraction of the countryside to tourism.
Until the Euro-crisis, profits from the bank financed the Palio di Siena, Siena's historic-building renovations and "biotech programs" intended to turn the Tuscan plain into a research hub. Nearly all that money – $150 million a year, on average, from 1996 to 2010 – has "evaporated" since 2010, according to a 2012 news report.
Main shareholders of Monte dei Paschi di Siena, situation reported 29 August 2012:
- 37.56% Fondazione Monte dei Paschi di Siena
- 2.527% JPMorgan Chase
- 4% Aleotti Alberto, president, Menarini pharmaceuticals
- 2.727% Unicoop Firenze Società Cooperativa
- 2.052% AXA
- "Annual Report 2013" (PDF). Monte dei Paschi di Siena. Retrieved 20 March 2015.
- Vincent Boland (13 June 2009). "Modern dilemmas for world's oldest bank". Financial Times. p. 9.
- "English version of the corporate website". MPS Capital Services. Retrieved 8 July 2013.
- "finanza-e-mercati", Ilsole24ore 24 January 2013.
- "mussari-lascia-presidenza" Ilsole24ore, 22 January 2013.
- Birnbaum, Michael, "In Italy, world’s oldest bank faces uncertain future", Washington Post, 1 September 2012. Retrieved 2 September 2012.
- "ombre-derivati-monte-titolo", Ilsole24ore, 24 January 2013.
- "borsa-tokyo-chiude", Ilsole24ore, 23 January 2013.
- "eurozona-atteso-calo-lindice", Ilsole24ore, 24 January 2013.
- "assemblea-mps", ilsole24ore.com, 25 January 2013.
- "borsa-tokyo-chiude-forte", Ilsole24ore, 25 January 2013.
- Mozee, Carla, "Bank of Italy OKs bailout for scandal-hit bank", MarketWatch, 26 January 2013. Retrieved 26 January 2013.
- Silvia Aloisi and Stefano Bernabei (23 August 2013). "Monte Paschi accused of misleading Italy regulator in 2012". Reuters.
- Valentina Za (29 December 2013). "Monte Paschi faces nationalization threat after cash call delay". Yahoo Finance.
- "BlackRock buys 5.75 percent of Monte dei Paschi". Reuters. 24 March 2014. Retrieved 24 March 2014.
- "clock-ticks-for-banca-monte-dei-paschi", online.wsj.com
- Nearly $1 billion loss for 3rd quarter
- Susan Moore (7 March 2009). "Old Masters remain unscathed by the downturn". Financial Times. Retrieved 14 June 2009.
- Lambton, Fred. "Saving Siena". The Spectator.
- Peter Popham (19 January 2008). "Plans for a new airport bringing cheap flights to Tuscany provoke furious opposition". The Independent (London). Retrieved 13 May 2010.
- "Azionisti ...", CONSOB, 29 August 2012. Retrieved 2 September 2012.
- "Azionisti ...", CONSOB, 10 December 2009.
- Official website
- Slide show of the bank's art collection
- Complete collection of Bank's Art Collection at Bank's site
- Sanderson, Rachel, "Finance: Entangled in Tuscany", Financial Times, 13 February 2013. "Repercussions of the Monte dei Paschi bank scandal are resonating far beyond Siena."