|Bid||1.8410 x 0|
|Ask||1.8900 x 0|
|Day's Range||1.8200 - 1.9280|
|52 Week Range||0.9855 - 1.9470|
|Beta (5Y Monthly)||1.92|
|PE Ratio (TTM)||23.97|
|Earnings Date||Feb 07, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 23, 2011|
|1y Target Est||2.19|
(Bloomberg Opinion) -- The troubled Italian lender Banca Monte dei Paschi di Siena SpA took another big step in its long path to redemption last week by selling subordinated debt for the second time in six months. An 8% coupon is expensive for the world’s oldest bank, but it can hardly complain given its years of troubles.Even though the yield is enticing, investors are still taking a gamble. They will doubtless have been encouraged by expectations that the Italian state will have their backs. Rome owns 68% of Paschi and there’s a fourth bailout on its way for the lender.The general environment for investing in Italian banks is a bit better too. Another lender, Banco BPM SpA, issued some perpetual hybrid debt on Tuesday. Paschi is deeply into junk territory yet it managed to raise a chunky 400 million euros ($444 million). This was one-third bigger than a similar 10-year Tier 2 issue in July, and at a much lower cost than the 10.5% coupon it had to offer then. It was more than twice subscribed and the yield has tightened modestly since launch.Monte Paschi’s debt coordinators showed a fair amount of skill with last week’s sale, amid another record start to bond issuance this year. Only days ago, the bank told shareholders it will have to take a big hit to profit after writing down deferred tax assets. Still, for Monte Paschi it’s very helpful that the state aid just keeps coming. The bet by bond investors that Rome will keep doing whatever it takes may be a winning one.Reeling from an acquisition that drained it of cash just as markets peaked in 2007, Paschi has had to turn to its government three times already to replenish its capital as losses on bad loans piled up. The last round, in 2017, saw Italy effectively take over the lender while pledging to exit by 2021 under terms agreed with the European Union.The bank has made progress in cleaning up its balance sheet, but a ratio of non-performing loans of about 12.5% targeted for year-end and sluggish revenue render Paschi virtually untouchable for would-be partners. Luckily, as in the past, Italian taxpayers are on hand. Italy is in talks with Brussels to allow state-backed debt manager Amco to buy more than 10 billion euros of Paschi’s soured loans, a move that would reduce its bad debt ratio to below 5%, according to Morgan Stanley analysts.You can never be certain about Monte Paschi, a bank that hid losses with complex derivatives and was found by the European Central Bank to have inadequate governance and financial controls as recently as 2017. But another round of aid might make it look more attractive to rivals. Bond markets clearly find it palatable.To contact the authors of this story: Marcus Ashworth at firstname.lastname@example.orgElisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Another day, another extra-long bond issuance at absurdly low rates from an institution that counts its history in centuries, not decades. Oxford university is planning to increase the size of its 100-year bond, riding a wave of cheap borrowing that swept across Europe last year and has gained even more momentum this month . The university raised £750m from its first ever bond in 2017, as strong investor demand allowed the triple A-rated institution to borrow at attractive levels.
Moody's Investors Service ("Moody's") has upgraded to Aa3 from A1 the ratings assigned to the mortgage covered bonds issued by Banca Monte dei Paschi di Siena S.p.A.'s (the issuer, "MPS", deposits B1; adjusted baseline credit assessment b3; counterparty risk (CR) assessment Ba3(cr). For further information on the rating action taken by Moody's Financial Institutions Group, please refer to Moody's press release http://www.moodys.com/viewresearchdoc.aspx?docid=PR_416402. Moody's determines covered bond ratings using a two-step process: an expected loss analysis and a TPI framework analysis.
Moody's Investors Service (Moody's) today changed the outlook on the senior unsecured debt and deposit ratings of Banca Monte dei Paschi di Siena S.p.A. (MPS) to positive from negative. Moody's upgraded the bank's standalone Baseline Credit Assessment (BCA) to b3 from caa1, upgraded the subordinated debt rating to Caa1 from Caa2, and affirmed the long-term senior unsecured debt and deposit ratings at Caa1 and B1 respectively. Moody's also upgraded the BCA of MPS Capital Services S.p.A. (MPS Capital Services) to b3 from caa1, reflecting Moody's view that this entity is Highly Integrated and Harmonized (HIH) with MPS and that its standalone characteristics have limited credit significance.
(Bloomberg Opinion) -- After the financial crisis, Europe’s political leaders put together a complex set of rules to make it harder for future governments to bail out banks. That system is looking so full of holes that one wonders what the point of it is.Two episodes in a fortnight show that taxpayers are still very much on the hook for the financial system’s losses. At the start of December, the European Commission gave a green light to the rescue of NordLB, a German savings bank, by the governments of Lower Saxony and Saxony-Anhalt; the protection scheme of the German savings bank sector also chipped in.Then on Sunday, Italy set aside 900 million euros ($1 bn) to recapitalize Banca del Mezzogiorno-Mediocredito Centrale (MCC), a state-owned bank, so that it can save a private regional lender, Banca Popolare di Bari SCpa. Brussels hasn’t yet cleared this rescue plan, but Rome is confident it will. In recent years, Italy has rescued Banca Monte dei Paschi di Siena SpA and Banca Carige SpA. In 2015, the German states Hamburg and Schleswig-Holstein helped HSH Nordbank. It wasn’t meant to be this way. Between October 2008 and December 2012, European Union governments spent nearly 600 billion euros on recapitalizing banks and other asset relief measures, according to the Commission. The subsequent anger of voters prompted politicians to agree on a single rulebook, putting strict limits on when a government can prop up an ailing lender. The so-called Bank Recovery and Resolution Directive says governments must generally impose losses on shareholders, bondholders and, in some cases, large depositors before they’re allowed to pour in public money.Some politicians have done everything they can to circumvent the rules. Italy is reluctant to inflict pain on local bondholders, who are often retail investors. In Germany, regional governments refuse to let their banks fail, preferring to fork out billions instead. So while the letter of the new rules still stands, politicians have devised so many exemptions that their spirit is gone.Take NordLB. The Commission argues that Germany’s regional governments will intervene with the same conditions as a private investor, which will ensure no distortion of competition. Yet the rescue, including a 2.8-billion euro cash injection and 800 million euros in guarantees, appears far more generous than what was on available from the market.Meanwhile, Italy’s government says MCC will intervene in Banca Popolare di Bari alongside the voluntary arm of the country’s deposit guarantee scheme; and that this proves the rescue is being done under market conditions. However, this interbank scheme has acted repeatedly as a de facto lender of last resort to banks. It’s highly doubtful that any other investors would help out like this.This isn’t to say the last decade’s banking reforms were entirely in vain. Since 2014 the European Central Bank has taken over from national watchdogs as the chief supervisor of the euro zone’s largest banks. (Unfortunately, less significant institutions such as Banca Popolare di Bari remain under local oversight). The ECB has its own problems — especially in terms of communication and transparency — but it’s usually a tougher policeman than many of its national counterparts.The bigger problem is that the euro zone’s “banking union” is still fragmented. The Single Resolution Board (SRB), a body within the banking union that’s in charge of winding down failing banks, has an excessively high bar for intervening. As a result, smaller and medium-sized banks are dealt with using a patchwork of national rules. Add to that the reluctance from politicians to let banks go bust and you can see why taxpayers routinely pick up the bill.It’s not too late to salvage the post-crisis reforms. A priority must be to harmonize national bankruptcy regimes, which provide endless loopholes to escape the region’s common rules. The SRB shouldn’t just intervene in the event of problems at the largest banks. Politicians should finally complete the banking union, creating a joint deposit guarantee scheme for the region. This would ensure that all depositors (up to 100,000 euros) face exactly the same risks, and end the increasingly varied national schemes.None of this will be possible unless politicians and supervisors agree they’re truly ready to impose losses on investors and let some banks go bust. Bailouts wash away past sins. For all the post-crisis backlash, this explains their enduring appeal.To contact the author of this story: Ferdinando Giugliano at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- As 2019 draws to a close, there’s more than a whiff of banking deregulation in the air. The U.S. has relaxed its lender stress tests and made it easier again for Wall Street to trade using its own funds. In Europe, capital requirements are being softened.The reining in of bank risk after the financial crisis is giving way to a loosening of the rules just as the desperation for yield makes banks more willing to gamble. This seems imprudent: Although banks are safer than they were before Lehman Brothers imploded, critical weaknesses remain.Sheila Bair was chair of the U.S. Federal Deposit Insurance Corp. — the body that preserves confidence in the American banking system — from 2006 through 2011, and she’s a current board member at Industrial & Commercial Bank of China Ltd. As such, she has a unique insight into how far lenders have changed. I interviewed her in Washington DC recently for a Bloomberg Storylines episode about Italy’s Banca Monte dei Paschi di Siena SpA, “How a $450 Million Loss Was Made to Disappear.”In November, 13 bankers from Paschi, Deutsche Bank AG and Nomura Holdings Inc. were convicted for helping the Italian lender hide losses in 2008. It may be an old case but it still serves as a cautionary tale of how banks can massage their numbers.Crucially, as I discussed at length with Bair, banks’ accounts are still impenetrable and reforms have done little to improve transparency. Complex transactions can obfuscate lenders’ true financial health, while more detailed rules have made regulatory reporting and external scrutiny even harder.Here’s an edited transcript of our conversation:ELISA MARTINUZZI: Before Monte Paschi, Lehman Brothers had also used an accounting trick, “Repo 105,” to make its books look stronger. What have we learned from Lehman?SHEILA BAIR: The continued availability of accounting tricks to dress up your regulatory ratios and your public disclosures, I think. And it’s still going on.EM: How far has post-crisis regulation curtailed the banks’ capacity to work around the requirements?SB: Whether it’s [tackling the] accounting gimmicks people used to game their regulatory ratios or just more fundamentally how much capital and liquidity there is in this system, we’ve made them a little better. But we really haven’t made any kind of fundamental reforms.EM: How concerned should taxpayers be?SB: As a citizen worried about the stability of the economy, which relies on a stable financial system, I think people should still be concerned. There’s this kind of assumption that it’s yesterday’s news. And I think that’s probably ill-advised because I think there’s still some real fragility in the system.There’s too much complexity around the financial instruments that we tolerate on regulated banks, the exposures that they take. And frankly, culture too. I mean, do bank managers of integrity use derivatives to dress up their balance sheet or try to hide a risk and losses that they have? No, I don’t think good managers would do that. But there probably is still a culture problem too in the financial services industry that management will entertain strategies like that when they shouldn’t.EM: How has transparency around disclosures improved?SB: If anything, we’ve made it harder because it seems so many of the rules, especially around capital and liquidity are so complex to the extent investors or others — analysts, journalists — want to determine how good those rules are and how effectively banks are complying with those rules. I think the complexity really hinders that kind of outside discipline. It’s kind of an inside game now with the banks and their supervisors.EM: Where do you see systemic risk building up today? Is it away from the banking industry?SB: Nothing’s really outside the banking sector, because we [saw] during the subprime crisis too that all of these toxic mortgages were being passed on broadly to investors.EM: Are memories of the financial crisis fading?SB: It really distresses me, because having lived through that and thinking that we had learned our lesson, to see what’s going on now [simplifying and weakening the post-crisis rules] is just wrongheaded. The debate we should be having is what’s going to happen in the next year or two if the U.S. economy, or more likely the global economy, slides into recession; how well banks are prepared, should they be building a bit more of their capital cushion now?EM: Are you confident we won’t be seeing another Monte Paschi? SB: No, I'm not confident that we won't. I absolutely would say that I'm not confident we won't. No, no, no.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
If you're interested in Banca Monte dei Paschi di Siena S.p.A. (BIT:BMPS), then you might want to consider its beta (a...
(Bloomberg Opinion) -- On Friday, judges in Milan convicted executives from the world’s oldest bank, Banca Monte dei Paschi di Siena SpA, for falsifying its accounts in collusion with Deutsche Bank AG and Nomura Holdings Inc. Some 11 years after the misdeeds, it’s hard to have complete faith in the ability of regulators to prevent similar bad behavior.That executives have been held accountable for one of Europe’s biggest banking scandals will be some comfort to savers and taxpayers. Deutsche and Nomura face financial penalties of $175 million (Paschi has already settled). Michele Faissola, Sadeq Sayeed and Giuseppe Mussari — formerly of Deutsche, Nomura and Paschi — were among 13 executives sentenced to jail, the most senior bankers convicted of crisis-era chicanery. Nomura is considering an appeal, while Deutsche will review the court’s ruling.Regulators don’t have much to take credit for here in reining in the excesses of these lenders. After hiding hundreds of millions of dollars in losses in 2008 and 2009, Paschi went on to build a mountain of bad loans that led to multiple taxpayer rescues. Deutsche, meanwhile, has only just embarked on a serious plan to restore profitability after myriad fines for dubious practices.The complex Deutsche derivatives trade at the center of the Milan trial was certainly ingenious. Dubbed Santorini, it made a loss disappear on a previous deal that would have blown a big hole in Paschi’s 2008 results. To do this, Deutsche made one bet on interest rates with Paschi that it would almost certainly lose and another wager that it would win. While Deutsche paid out immediately on the bet that Paschi won, the German bank let the Italian bank pay out on the wager that it lost over several years. That allowed Paschi to window-dress its accounts and hide the previous loss.The outside world would be none the wiser for years, until I came across documents that helped recreate the concoction. Within days of my article being published in January 2013, a similar deal emerged between Paschi and Nomura; Paschi said it would restate its accounts. The derivative dressed up as a loan was so successful for Deutsche it repeated the trade with clients around the world. The German bank also ended up correcting its figures.Given the widespread nature of the gimmickry, it’s reasonable to ask where the regulators were in all this. The simple answer: asleep at the wheel. For years (and well before my reporting) financial supervisors from New York to Rome were aware of how far these banks were pushing the envelope.As early as 2010, Italy’s central bank, then headed by former European Central Bank president Mario Draghi, had discovered that Paschi had been masking losses. The Bank of Italy said in a 2010 report that it didn’t have “powers as regards accounting” and that the matter needed further study.There was no great rush. The same Paschi managers remained in place through 2012. In the meantime, the bank’s bad loans were piling up as local political interference and reckless lending led it to overlook credit risk. Bailout followed bailout as losses mounted.As recently as 2016, Paschi was probably insolvent and its financial controls were still deemed perilously weak. That didn’t stop the ECB in 2017 nodding through the lender’s third helping of state aid in less than a decade. Over and over, supervisors failed to pick up on practices detrimental to Paschi’s longer-term viability.Deutsche’s rehabilitation has been torturous too. It wasn’t until 2015, well after the bank had been embroiled in multiple scandals — from rigging benchmarks to laundering dirty Russian money — that regulators sought to tame its risk-taking ethos. Under former chief executive officers Anshu Jain and his predecessor Josef Ackermann, Deutsche Bank had become a factory of risky and complex trades from its London hub as it sought to compete head on with Wall Street. Only now, under chief executive officer Christian Sewing, is the German giant attempting a deep reboot of the business by shrinking its trading unit. Unfortunately the ambitious reorganization has coincided with an economic slump.Of course, there are many obstacles that regulators will point to that complicate their roles, not least the need to tread carefully to maintain financial stability — especially at a systemically critical lender such as Deutsche.But by failing to place sufficient pressure at the right time, regulators have allowed the banks they oversee to delay the inevitable: These companies need to find other ways to make money. European bank valuations are close to the level they were in the 1980s; confidence in the industry is fragile.There is some optimism that the shift of bank regulation from the national level to the European level, via the ECB, will strengthen supervision. The deepening of a euro zone banking union with a common deposit insurance scheme, championed last week by Germany’s finance minister Olaf Scholz, would further erode national meddling.Unfortunately the ECB’s early record as a watchdog has been mixed. Draghi’s successor Christine Lagarde has pledged to keep banks safe. She also needs to keep them honest.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Italy's Cerved would like to combine its debt management division with a debt purchasing business as it studies a possible sale or merger of the unit, its chief executive said. "We believe there is a consolidation trend in the market and size will matter in this business going forward," CEO Andrea Mignanelli told an analyst call on Wednesday. Italy's loan recovery industry has grown quickly in recent years fed by some 170 billion euros in impaired loans which banks have been forced to offload to meet supervisory demands.
European shares staged a comeback from early losses on Tuesday as growth sectors led the charge, after Washington's move to delay tariffs on some Chinese goods provided a lift to battered global sentiment. The U.S. administration will delay imposing a 10% tariff on certain Chinese products, including laptops and cell phones, beyond September, the Office of the U.S. Trade Representative said on Tuesday. A separate list also included some imports that would be exempted altogether from tariffs.
Rating Action: Moody's upgrades the ratings of Class C and D notes in Siena Lease 2016-2 S.R.L. This is a cash securitization of lease receivables originated by MPS Leasing & Factoring S.p.A. (fully owned by Banca Monte dei Paschi di Siena S.p.A.) and granted to small and medium sized enterprises and individual entrepreneurs located in Italy. The upgrades are prompted by the increase in the credit enhancement ("CE") available for the affected tranches as a result of portfolio amortization.
(Bloomberg Opinion) -- Who knew there was investor appetite for subordinated Greek bank debt?Because of the relentless hunt for returns in yield-starved Europe, Piraeus Bank SA, one of Greece’s big four lenders, has been able to brave the European capital markets for the first time since the financial crisis.Piraeus isn’t opting for senior bonds, and is instead plumping for Tier 2 subordinated debt (which sits midway in the capital structure between top-rated debt and equity-like capital). This means the notes would be fully subject to investor bail-in rules, where bondholders take a financial hit should the bank fail.While the bank has been bolstering capital by offloading bad loans and selling assets, this issue will help it meet its commitments to the European Central Bank. Last year, the ECB asked the company to raise much as 500 million euros ($560 million) as part of its strategic recovery plan. It’s notable, nonetheless, that the lender has found plenty of takers despite all the well-known risks around the Greek banking system.Piraeus has raised 400 million euros from the 10-year subordinated security, with an issuer call option after five years. The very high 9.75% coupon was clearly attractive to buyers, but it carries danger signs too. Paying that much interest to bondholders will be a heavy burden for the bank’s business to support.Indeed, this might be a deal too far for wiser investment heads (regardless of all the hedge funds piling in here). Just because government yields are plunging doesn’t mean credit risk is improving; it usually means the opposite. In fairness, this issue is for bank capital specialists only but there’s always a deal that corrects the market’s over-enthusiasm for the diciest assets.The offer would have been unthinkable a year ago, and comes courtesy of a sustained decline in Greek sovereign yields, with five-year yields falling below their Italian equivalents, and a sixfold rally in Piraeus Bank's share price since February. It helps that imminent national elections are expected to deliver victory to the pro-business New Democracy Party. For Piraeus, it makes sense to strike now and the books were more than twice covered.Still, a big leap of faith is required to believe that that this ultra-high risk, CCC-rated junk bond will be repaid at that call date in five years time. Investors won’t want a repeat of what happened when Italy’s Banca Monte dei Paschi di Siena SpA issued a similar bond in January 2018. That now trades at close to half its initial value. Piraeus’s non-performing loans make up more than half of its total lending, despite its offloading of 500 million euros of them to private equity buyers this month. Even after the share price rally, the stock only trades at a price-to-book ratio of less than 0.2. The path to easing the bad debt burden will be arduous.As part of Piraeus’s strategic plan, the bank sees non-performing loans dropping to about 9% of the total by 2023, which requires the elimination of 21 billion euros of exposure. It has signed an agreement with Intrum AB, a Swedish debt collection specialist, to help manage its bad debt pile. However, the speed at which Greece’s lenders will be able to clean up their loan books is uncertain. The government and the Greek central bank have two separate, not entirely complementary, initiatives to help banks do this but they’re still obtaining European Union approvals.Piraeus’s plan to improve its fee income by 33% by 2023 looks ambitious too. As the biggest private lender to SMEs in Greece, its growth is tied ultimately to the country’s nascent economic recovery. A shareholder group that includes the EU-backed Hellenic Financial Stability Fund – as well as John Paulson, Vanguard, Blackrock Inc. and Schroders Plc – offers some reassurance. While success would be another important milestone in Greece’s long road to recovery, you’ll have needed nerves of steel to jump on this one.To contact the authors of this story: Marcus Ashworth at email@example.comElisa Martinuzzi at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Italy's state owned Monte dei Paschi could merge with lenders of similar size although the list of candidates is thin, Chief Executive Marco Morelli said on Monday. "In theory Monte dei Paschi could be a merger partner for many banks, but the actual list (of candidates) is narrow", Morelli told Italian daily Il Resto del Carlino. The CEO added that another option was for the Italian Treasury, which owns a 68% stake following a bailout in 2017, to gradually reduce its stake.