Exclusive: Italy Picks Bank Of America And Orrick To Advise On MPS Privatisation – Sources


ROME/LONDON/MILAN: Italy’s Treasury has picked Bank of America and Orrick as monetary and authorized advisers to safe a merger deal for bailed-out financial institution Monte dei Paschi (MPS) as a part of its privatisation plan, 4 sources near the matter instructed Reuters.

Rome goals to clinch a merger with a more healthy peer in 2021, the sources stated, to offer an extended-time period answer for the financial institution, which has been backed by the federal government since 2017 following an 8 billion euro ($9.5 billion) rescue deal.

The mandates, which can final 12 months, will see Bank of America’s co-head of the monetary establishment group, Giorgio Cocini, and Orrick’s companions Patrizio Messina and Marco Nicolini working intently with the Treasury to draw consumers and tackle the financial institution’s capital shortfalls.

Rome is predicted to pay about 150,000 euros in monetary and authorized charges, with the lion’s share going to Bank of America, the sources stated.

Italy’s Treasury and Orrick weren’t instantly out there for remark, whereas Bank of America declined to remark.

Dogged by authorized claims and poor high quality belongings, MPS is a troublesome promote in Italy’s banking market, which has a surplus of branches and has seen an increase in mortgage losses and distant banking within the COVID-19 pandemic.

UniCredit is seen as the popular purchaser for the 548-12 months previous financial institution given its strong stability sheet, sources have stated, regardless of boss Jean Pierre Mustier ruling out mergers which, he has stated, solely add “branches and staff.”

Italy’s third-largest financial institution, Banco BPM, is within the technique of exploring doable tie-ups and might also emerge as a viable bidder for MPS, one of many sources stated.

Banco BPM has additionally repeatedly denied any curiosity for MPS.

Any deal for the Tuscan financial institution would solely come after the Treasury acts to take away authorized claims amounting to 10 billion euros, whereas additionally injecting recent capital.

Rome has put aside 1.5 billion euros to shore up MPS however the financial institution faces a shortfall of at the least 2 billion, sources have stated.

Its capital buffers are set to fall under minimal necessities early subsequent 12 months, hit by the price of a foul mortgage clear-up it’s about to finish in addition to provisions towards authorized dangers following the conviction of former prime executives.

($1 = 0.8437 euros)

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