MILAN (Reuters) – Italy’s Monte dei Paschi (MPS) said on Thursday it was working to reduce its legal risk as the European Union assessed the ability of state-owned banks to stay in business before opening up more public aid.
Italy saved the MPS in 2017 at a cost of 5.4 billion euros ($ 6.6 billion) to taxpayers. Now it stands ready to cover at least part of the 2.5 billion euro shortfall in lenders, but wants to first find a buyer for it.
MPS said it would proceed with a cash call if the merger failed to materialize.
In a statement on Thursday, it said that significant uncertainty was clouding its planned capital increase due to an assessment by the EU competition authority on the bank’s ability to stand on its own.
FRANKFURT (Reuters) – Frankfurt prosecutors are investigating German financial regulator BaFin’s handling of bankrupt payments company Wirecard, a spokesman for the prosecutor’s office said on Wednesday.
Federal prosecutors and police made a surprise visit to BaFin’s headquarters on Wednesday to submit a letter requesting information, the spokesperson said.
BaFin has faced widespread criticism for failing to find fault before the collapse of the payments company, and its chairman has stepped down.
BaFin declined to comment.
“We have received several letters from concerned citizens requesting charges against the unnamed person from BaFin,” said a spokesman for the prosecutor’s office.
The complaints revolved around the alleged lack of oversight of Wirecard AG and Bank Wirecard, he said, adding there were also complaints about the alleged use of insider information in trading Wirecard securities.
“We are investigating these allegations,” he said. We haven’t opened a formal criminal investigation.
The involvement of Frankfurt prosecutors raises further questions about Germany’s surveillance of a company that began processing payments for gambling and pornography before becoming a star of “fintech” – financial technology – and ultimately Germany’s biggest case of fraud.
Prosecutors also visited unidentified German federal authorities and unidentified banks with requests for information, the spokesman said.
Reporting by Tom Sims and Patricia Uhlig. Edited by Maria Sheahan and Mark Potter
BRASILIA (Reuters) – Brazilian President Jair Bolsonaro signed into law on Wednesday a law establishing the autonomy of the country’s central bank to ensure it is free from political interference.
The law did not change the way banks set interest rates, but prevented them from becoming political by assigning fixed four-year terms to governors and directors that no longer fit into the presidential election cycle.
The bank president will no longer be part of the ministerial cabinet.
Bolsonaro praised the current head of the bank, Roberto Campos.
“I only signed this law because I believe in your ability and integrity,” said the president.
Monetary authorities already have de facto autonomy to implement policies deemed necessary to achieve inflation targeting goals, but the bank president is technically a member of the cabinet appointed by the Brazilian president.
The law stipulates that the secondary objectives of banks after fighting inflation include ensuring financial system stability, smoothing economic cyclical fluctuations, and promoting full employment.
Economists say it will help boost economic stability, business confidence and attract investment.
Reporting by Anthony Boadle; Edited by Himani Sarkar
ROME (Reuters) – Italian Prime Minister Mario Draghi’s new government aims to tackle troubled bank Monte dei Paschi by pushing a plan to re-privatize its losing lenders, said sources close to the matter.
Rome spent 5.4 billion euros ($ 6.6 billion) in 2017 to rescue Tuscan banks, leaving the state with a 64% stake. MPS now needs another 2.5 billion euros to rebuild its capital reserves.
A sale would stop the MPS from becoming a permanent taxpayer drain and would allow Italy to fulfill its commitments to the European Union made at the time of the bailout.
With Italy’s change of government, there is speculation that Draghi, the former head of the European Central Bank, could use his cachet with European authorities to buy more time and delay the sale of MPS.
But a source briefed on the government’s plans said both Draghi and Economy Minister Daniele Franco intend to continue working to seal a merger deal for MPS with stronger rivals.
The prime minister’s office declined to comment.
Finding MPS buyers has proven difficult despite the ample incentives from the Ministry of Finance to sweeten the deal.
Italy has negotiated the sale of MPS to UniCredit but a change at the helm of Italy’s second-largest bank has halted talks.
New UniCredit CEO Andrea Orcel, who started his job after mid-April, may prefer other options in Italy’s consolidated banking sector, sources said.
With the sales prospect fading in the near future, MPS auditors have expressed concern about the bank’s financial future, said three people with knowledge of the matter.
The MPS is working to ensure auditors sign off on its accounts, a formality required for Thursday’s board meeting, the people said.
MPS declined to comment.
Annual losses at Tuscan banks jumped more than 60% to 1.7 billion euros last year.
Reported by Giuseppe Fonte in Rome and Valentina Za in Milan. Edited by Jane Merriman
SYDNEY (Reuters) – Australia’s AMP Ltd and former US-based Ares Management applicants are close to agreeing a joint venture that would give American funds control over its asset management business AMP Capital, sources with knowledge of the deal said.
The arrangement, which could be finalized and announced in the next week, will utilize Ares’ distribution network to distribute the AMP investment fund, the person said, asking not to be named because negotiations are private.
The AMP representative, who on February 11 said Ares had withdrawn a A $ 6.36 billion ($ 5.03 billion) takeover offer for the entire company, declined to comment.
Ares’ representatives also declined to comment when contacted by Reuters.
Bloomberg reported on Tuesday that the deal could value the asset management business more than A $ 3 billion and that AMP would retain a minority stake, citing people with knowledge of the matter.
Following a review in the past six months seeking to find a buyer for AMP as a whole or its unit, the Sydney-based company said last week it had closed all but one process.
Its Australian and New Zealand wealth management business and banking division, are no longer under review but will continue to negotiate with Ares about potential sales or partnerships involving AMP Capital.
The deals are uncertain, said Chief Executive Francesco De Ferrari at the time.
($ 1 = 1.2653 Australian dollars)
Reporting by Paulina Duran in Sydney; Edited by David Evans