Siena - With accounts in the red, but a loyal customer-base. That’s how MPS (Banca Monte dei Paschi di Siena) closed its first half of 2017: €3.24 billion in losses, mainly due to four billion in loan readjustments that point to a loss of 21% in the value of some 26 billion in overall bad loans. Despite the bank’s troubled recent history, however, total deposit volumes haven’t dropped (+0.2% to EUR203 billion), while bond deposits and current accounts actually increased by 9.4 billion, from the beginning of the year, and 3.8 billion from March.
The bank’s half-yearly result was also weighed down by the 30 million devaluation of its stake in Atlante Fund, while a welcome boost came in the form of a tax rebate worth 510 million, the indirect result of some changes to the ACE norms, a mechanism that rewards entrepreneurs who invest in the capital of their businesses - a maneouvre adopted last Spring, when Italy’s lenders had to curtail their practices. While, in Milan, MPS’s board approved the bank’s half-yearly report, Italy’s financial regulator Consob was updating data on the bank’s newest key shareholders, following a 8.2 billion precautionary recapitalization.
And, coming as a further nudge to the lender to clear its books of NPLs, in recent days MPS was the recipient of 3.85 billion from the state, which, together with 4.5 billion coming from the conversion of its subprime loans, will ensure balance in the bank’s accounts. Following the precautionary recapitalization, MPS’ net assets amount to €11.3 billion, with a CET1 ratio of 15.4%. Italy’s Economy and Finance Ministry currently controls the bank with a 52.18% stake, while Assicurazioni Generali holds a 4.3% stake, acquired through conversion of MPS bonds purchased from the troubled lender.
The bank’s renewed solidity has prompted rating agency Fitch to raise its long-term outlook, and that of the bank’s senior tranche of loans, from B- to B, with a “stable outlook”. Revenues fell by 21% to €1,852.7 million in the first half year, due to a decline in commissions (-8.8% to 903.3 million), and in interest margin (-12,7% to 857.5 million). Declining net results in trading and financial transactions (-86.5% to €42.9 million) were also contributing factors.