September 24, 2020

Italy is considering a merger like CaixaBank and Bankia in Spain




The recent announcement of the merger of the Spanish banks CaixaBank and Bankia has caused Italy to consider whether to follow this model and merge Monte dei Paschi di Siena (MPS), recapitalized as a precautionary measure in 2017, with another Italian entity to promote «the birth of the third or fourth national bank ».

“The winning model is Spain with the recent merger between Bankia and CaixaBank, under the leadership of the government of (Pedro) Sánchez, to create a large Spanish bank. A similar operation could also be carried out in Italy», Said today the president of the parliamentary commission of investigation on the banking and financial system of Italy and member of the governmental Movement 5 Stars (M5S), Carla Ruocco, in an interview with the economic daily« Il Sole 24 Ore ».

“We could strengthen our banking system stimulating the birth of a third or fourth national bank. Bankia’s situation is very similar to that of MPS in Italy, “he pointed out, while encouraging Italy to follow” the example of Spain. “

The Italian State is currently the majority shareholder of the Tuscan bank with 68% of the capital, but its intention is to privatize it and exit the capital in 2021, according to the conditions that it negotiated in 2017 with the competition authorities of the European Union (EU) to save it from bankruptcy.

The government’s plan is for MPS to transfer bad loans worth 8.1 billion euros to a “bad bank” that will be managed by the state administrator for this type of loan, AMCO, and sell the “healthy” part to another investor.

‘This is not the time to sell a major banking company like MPS, much less to competitors in the EU or outside the EU. No European country sells its banks to foreign institutions “, Ruocco has argued.

Low interest rates have hit banks hard in recent years and more recently they are facing the consequences of the crisis stemming from the coronavirus pandemic.

In this sense, MPS currently has a capitalization on the Milan Stock Exchange of only about 1,650 million euros, which would mean that if the State sells its 68% stake at current prices it would obtain “close to one billion” compared to an investment made. of “almost 8,500 million.”

-90% profitability for the State

“The profitability for the State would be equivalent to -90%”, he lamented. In your opinion, the Italian State should go ahead with the assignment of bad debts to AMCO and then sell the subsidiaries and branches of MPS to another entity in the country to create the third or fourth national banking group.

“It is necessary to go to Europe to explain that the sale of MPS does not pursue national interests and creates damage to national public finances. (…) The COVID-19 pandemic has shown that the national banking system is a strategic asset, “he concluded.

The possible merger between CaixaBank and Bankia would give rise to the first Spanish bank by assets and would be the largest operation in the sector in the last two decades.

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