February 13, 2017 2:58 pm

Monte dei Paschi pecuniarily and panoramically busted

Monte dei Paschi di Siena – a bank with tradition and with meanwhile traditional bad results, liquidity problems and poor performance. The latest figures confirm this rhetorical figure as BMPS reported a net loss of 2.53 billion Euros for the last quarter of 2016. This brings the last year’s total loss to 3.38 billion Euros. A the same time common equity Tier 1 ratio gave way to four percentage points, dropping to 8 percent from 12 percent in 2015. As a result the Total Revenues compared to the prior-year period decreased by 18.4 percent, standing at 4,256 million Euros.
Monte dei Paschi also reported a 4-billion-Euros worth reduction of net non-performing exposures and an increase of coverage of unlikely-to-pay loans to 40.3 percent (corresponding +1,110bps Y/Y) and of bad loans to 64.8% (equivalent to +130bps Y/Y) as a result of increased provisions rising to 2.45 billion Euros.
A pecuniary panoramic view
Facing all these less encouraging figures, it is becoming increasingly clear that Monte dei Paschi will have to fight further tough struggles to raise sufficient capital to meet the losses that will arise from the sale of distressed loans amounting to 27.7 billion Euros the bank committed to selling as their contribution to the government’s step in, helping Monte dei Paschi to cover the capital shortfall the European Central Bank estimated to be worth €8.8 billion Euros.

Italy's banks and their NPLs ©Bloomberg

Italy’s banks and their NPLs ©Bloomberg

So better lean back and enjoy Tuscan landscapes instead of being stressed by toxic credits. But the woodworms are already gnawing inside the wooden wine barrels stored at the picturesque properties that Monte dei Paschi granted credits for. Ambitious constructions and projects of luxury accommodations as collaterals for credits that in the course of the financial crisis turned into Non-performing Loans. Monte dei Paschi now struggles  to find buyers that are willing to pay appropriate prices, leave alone to offer at least the minimum investment prices.
If Monte dei Paschi auctioned the properties at very much lower prices, the bank would be forced to make major adjustments in its balance sheet. The capital quota thus would fall below the requirements of the ECB and the level of the NPL portfolio would automatically rise.
Debitos: The pecuniarily perfect secondary debt market
Never mind the picturesque Tuscan landscapes when a clear view into the finance conditions shows the grey reality with Monte dei Paschi di Siena as its main protagonist. Better widen your own financial panoramic view by joining our Debitos plattform as the leading pan European secondary debt market offering market-oriented and fully digitalized NPL divestiture processes. Banks benefit from access to more than 420 institutional investors realizing a number of advantages such as speed, transparency and significantly lower costs in reducing their non-performing loan books.
Banks also profit from the free indicative valuation of bad debts, the reduction of the internal complexity of co-ordination, the maximization of revenues thanks to simultaneous addressing of more than 420 qualified investor and of full transparency during all phases of the real-time auction process. The unrivalled speed of Debitos’s auctions is another big plus as due diligence, valuation and pricing are directly and without without any delay portrayed over our platform.
Please consult the above cited websites for further information to our article:
Press release BMPS (PDF):

Bloomberg online:

This post was written by Marcello Buzzanca

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