Bad loan manager AMCO, which is backed by Rome, is looking to hoover up around 60% of UniCredit’s problem debts while also ridding Monte dei Paschi of some high-risk loans. The plan is part of measures being readied by the Treasury in order to press ahead with the sale of MPS, whose plight has come to symbolise Italy’s long-running banking crisis. Shares in UniCredit extended gains on the news, rising by as much as 7.4% before closing more than 6% higher. Italy’s Treasury, AMCO and UniCredit declined to comment when approached by Reuters.
The Treasury aims to have a range of solutions ready by the end of January 2020, despite rifts within the ruling coalition which risk toppling the government. In a bid to meet re-privatisation commitments agreed with Brussels, the Treasury is working with advisers to tackle the complexities of a deal, including providing a possible state guarantee to shield any future owner of MPS from around EUR 10 billion in legal claims which the bank faces after decades of mismanagement.
MPS recently added Credit Suisse to its line-up of advisors, which already included Mediobanca, while UBS joined JP Morgan in representing UniCredit. Bank of America and Orrick are acting as financial and legal advisers on behalf of Italy’s Treasury. The European Central Bank is closely monitoring steps to address MPS’ capital woes, putting pressure on the Treasury which wants to have a deal ready to be approved at UniCredit’s annual meeting in April 2020. UniCredit has yet to sign a non-disclosure agreement to enter formal talks as it seeks more reassurance that both the European Union and the ECB will back the package of measures.
Reuters also reported that some UniCredit investors are against the Monte dei Paschi takeover. Rome is trying to reduce its 64% stake in Monte dei Paschi (MPS), after spending EUR 5.4 billion in a 2017 bailout of the world’s oldest bank. MPS now needs up to another EUR 2.5 billion (USD 3 billion) to bolster its finances.
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