MPS, the third all-Italian hub is approaching
Monte dei Paschi di Siena, the world’s oldest credit institution, appears to be emerging from a long financial crisis. The accounts for the first nine months of 2023 reveal a profit of 929 million euros, marking a turning point in the management of the CEO, Luigi Lovaglio. The bank is now in a better position to become part of a possible third banking hub, a vision shared by the Italian government. However, the road to success still presents challenges, including privatization and possible merger with Bper Banca or Banco BPM.
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After years of crisis, MPS’s positive numbers demonstrate an effective recovery. With profits above analysts’ estimates and prudent management, the bank presents itself as a renewed reality. Its CEO, Lovaglio, was praised for the flawless execution of an ambitious plan that led to significant cost reductions and a successful capital raise. The Italian government is committed to exiting MPS’s capital by 2024, as agreed with the European Union. The Ministry of Economy is working on two fronts: the placement of part of the capital on the market and the hypothesis of building a third banking hub with Bper Banca and Banco BPM. The constantly increasing valuation of MPS shares could facilitate privatisation, but the expiry date remains a crucial variable.
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The idea of a third banking hub guides the government’s strategies. MPS’s recent profitability could make the operation more attractive, but its realization will depend on multiple variables, including negotiations with Bper Banca and Banco BPM. The possibility of involving Unicredit in the event of failure is still on the table. Despite progress, MPS still faces challenges, such as the risk of capital losses during privatization. The government seeks to maximize the return on public investment, balancing the difficult financial situation with the need to free up resources. The conclusion of the 2023 financial year could lead to crucial decisions on dividend policy and asset optimization.
Monte dei Paschi di Siena seems to be entering a new era of stability and prosperity. However, the road to full rebirth is still long, with significant challenges to overcome. Privatization and possible mergers represent opportunities and risks, and only time will tell whether MPS will be able to maintain its promising recovery trajectory.
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