Italy’s MPS will open up the data room next week but needs a source of time | Instant News


ROME / SIENA (Reuters) – State-owned company Monte dei Paschi is expected to provide access to confidential data to potential merger partners within days, three sources with knowledge of the matter said on Wednesday.

PHOTO FILE: PHOTO FILE: Entrance to the Monte dei Paschi head office in Siena, Italy, 27 October 2017. REUTERS / Stefano Rellandini / Photo Files / Photo Files

The opening of the data room, which marks the start of the process for the re-privatization of Tuscan banks, comes as Italy faces a government crisis after the junior coalition party on Wednesday withdrew its ministers from the cabinet.

Monte dei Paschi (MPS) has announced a capital shortfall of up to 2.5 billion euros ($ 3 billion) and will present plans to fill it to the European Central Bank at the end of the month.

While the Ministry of Finance continues to work to fulfill promises made to Brussels when it rescued the MPS in 2017, people say Rome will only be able to present an outline of planned steps for the bank and count on winning more time from the ECB.

In order to come up with a durable solution to bank woes, the Ministry of Finance is looking to conclude a merger deal for MPS and has focused on UniCredit as the ideal partner.

With UniCredit now in the process of selecting a new chief executive after CEO Jean Pierre Mustier said in November he would step down in mid-April, MPS is also looking for possible alternatives.

The MPS said on Monday that its advisers would explore options regarding opening up the data room. Apart from UniCredit, Banco BPM, BPER Banca, Credit Agricole Italia and BNL-BNP Paribas will also be explored, said two sources.

Asked about the list of names, both MPS advisors, Mediobanca and Credit Suisse declined to comment.

Banco BPM does not currently include MPS among possible merger options, but its advisers are ready to assess the situation if they are to be contacted, a source close to Banco BPM said.

BPER Banca declined to comment. Credit Agricole Italy and BNL-BNP Paribas could not be reached for comment.

Financial sources said Credit Agricole Italy, which plans to launch a takeover offer for smaller rival Creval, is not interested in MPS.

Entering the data room requires the signing of a confidentiality agreement, a step UniCredit has not taken despite contact with the Ministry of Finance regarding the terms of a possible deal.

Rome has worked out a package of measures that will ensure the deal will not harm the buyer’s capital reserves, a key condition set by UniCredit which, according to a fourth source with knowledge of the matter, will also apply to other banks.

But the main hurdle for sales is about 10 billion euros in damages claims MPS is facing after decades of mismanagement.

MPS Fondazione in July filed an extra-judicial claim of 3.8 billion euros against the bank, which the Ministry of Finance hopes can be scrapped as part of a settlement deal.

Chairman Carlo Rossi on Wednesday said the foundation plans to initiate legal action on the claim, although it remains open for discussion.

($ 1 = 0.8214 euros)

Reporting by Giuseppe Fonte in Rome, Valentina Za in Milan and Silvia Ognibene in Siena; Additional reporting by Andrea Mandala; Edited by Elaine Hardcastle and Steve Orlofsky

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