The oldest bank in the world, MPS, will not cease to exist, at least for now. Unicredit and the Mef after months of due diligence they gave the (definitive?) ko to the operation. The purchase of Mps by Unicredit would have been only the latest in a series of upheavals in the world of Italian credit; in the last few years important banks with a strong territorial vocation have disappeared, think of Popolare di Vicenza, Veneto Banca, Banca Marche, Banca Etruria, UBI, Creval.
The histories of these banks are very different from each other, some have been liquidated, leaving behind scams, mountains of non-performing loans and impacts on local economic fabric, others have been involved in virtuous merger operations. The problems of Carige and Popolare di Bari between the territorial banks remain unresolved, while among the national banks the appeal is now all on Banco Bpm which could be prey to Unicredit itself.
The banking market will tend to be characterized by a few national champions, specialized banks, neighborhood banks (mainly mutual banks) which already belong to a holding company. This was the case, on the one hand due to the ignorance of administrators and institutions, and on the other hand due to the rapid transformation of the market that made obsolete the business models of banks focused on branches, customer loyalty and high interest rates. Models no longer consistent with the current context arising from Psd2 (which opens up to the sharing of current account information between banks), digitalization of processes (which makes the role of branches redundant for many activities), zero rates (which require a review of revenue models).
Returning to case of MPS, the lack of operation only indicates the state in which Mps is in and the generosity of the Mef to recognize incentives and take on non-performing loans was not enough to convince Orcel that he would have wanted another two billion dowry in addition to the five foreseen. The reason? Unicredit wants to preserve its equity ratios, among the most important indicators after the 2008 tsunami. Let’s not forget that Mps closed eight of the last ten years in the red, in particular with the red of 1.6 billion in 2020, the losses accumulated by MPS in the last decade amounted to around 23 billion euros; the parable was marked by the overvalued acquisition of Antonveneta from the derivatives scandal to the explosion of non-performing loans.
The revenue figure is also dramatic, in the last year of private management, 2016, MPS closed with revenues of 3.8 billion, to drop to 2.5 billion in 2020. The takeover of the state in 64% of the capital of the bank it cost about 7 billion (including the redemption of subordinated bonds), the countervalue to date of the same share is approximately 800 million.
These numbers would be enough to shame overwhelming political leaders who still talk nonsense about solutions for MPs (like infinite nationalizations), while the only possible solution must pass through the market, politicians who are unaware that for years it has been European supervision that has dictated the rules and timing of an increasingly interconnected and interdependent world of credit (see the case of sub-prime mortgages). Let’s avoid making the new Alitalia Mps because in this case it would cost the community much more than the two billion that divided the Mef from the Unicredit requests.
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