World’s oldest bank puts out a late-night statement confirming “the presence of errors” in three structured transactions. Click for the full release… (it’s in Italian)
In a land called Italia, where Savers saved, and Borrowers wanted to borrow from the Savers, there were some Banks.
The Banks took the savings from the Savers, and lent some of it to the Borrowers. And as long as the spread on the interest rate paid to the Savers was less than that paid by the Borrowers, all was well and peaceful in Italia. Read more
European regulators are convinced Italy’s Monte dei Paschi di Siena and Germany’s Commerzbank will fail to produce credible plans to plug capital deficits by Friday’s deadline, exposing both to the risk of full or partial nationalisation, the FT says, citing unnamed officials who said that it looked “almost inevitable” that a fresh injection of state funds would be needed. “These are the big cases,” said one. MPS was shown to have a €3.3bn capital shortfall in December stress tests conducted by the European Banking Authority. Commerzbank’s need to find €5.3bn of capital to satisfy the EBA is a huge burden for a bank in its fourth year of government support and desperate to avoid further state help, the FT reports separately. Commerbank’s takeover of troubled local rival Dresdner Bank, just as the collapse of Lehman Brothers greatly exacerbated the financial crisis, was enough to precipitate a need for a German government bail-out. Read more
Goldman Sachs could be holding around $400m of stock in Monte dei Paschi di Siena, according to rivals, after an accelerated bookbuild on behalf of one of the Italian bank’s core investors struggled to generate demand, reports FinancialNews. Goldman Sachs on Wednesday sold $535m of Monte dei Paschi stock, on behalf of shareholder Fondazione Monte dei Paschi di Siena. Stock closed on Tuesday night at €0.8775 and Goldman priced the block of Monte dei Paschi stock at €0.8325, around a 5.2% discount. But on Wednesday morning, shares traded below the price, at around €0.83 before falling further. On Thursday morning, the shares hit a high of €0.816. Rival bankers monitoring the deal said Goldman was likely to have been left with 80% of the deal, equivalent to an exposure of more than $400m. Attempts to exit the position without taking a loss are likely to be complicated by Monte dei Paschi’s $2.9bn rights issue later this year, a deal on which Goldman is working alongside Deutsche Bank, JPMorgan and Credit Suisse, among others. Read more
Cast your minds back to the (heady) final days of 2008 — when Deutsche Bank rattled the bond market by opting not to call one of its Tier 1 subordinated bonds.
The decision spooked bank debt investors. These kinds of callable bonds had usually always been called at par, at the first available date. Deutsche said it didn’t want to call because it would be more economic not to. Investors accused the German bank of “narrow financial logic” and threatened never to invest in their bonds again. Read more
Well, it could not have gone down worse. Banca Monte dei Paschi di Siena, which caters to Italy’s well-heeled and claims to be the oldest bank in the world, said on Thursday that it had agreed to buy its local rival, Banca Antonveneta, from Spain’s Santander for €9bn.
Shares in MPS, as it is known, were suspended for the rest of the day – and while trading resumed on Friday, the stock had to be re-suspended as the price plunged. Once market order was restored in Milan, the price settled about 10 per cent lower, valuing this 535 year-old institution itself at just over €9bn. Read more
Emilio Botín, chairman of Santander, on Thursday pulled off an impressive deal by selling Banca Antonveneta, an Italian bank it had just acquired, for an instant 60 per cent profit. Monte dei Paschi di Siena, the world’s oldest bank, said it had acquired Banca Antonveneta from Santander for €9bn. Santander has only just received Antonveneta as part of the carve-up of ABN Amro. It had valued the Italian bank, which has a 3 per cent market share, at €6.6bn. As part of the deal with MPS, Santander will keep Antonveneta’s corporate banking division, which is separately valued at about €1bn. As a result, Santander estimates it has made an instant capital gain of about €3.4bn out of the sale. Read more