Decline and near fall of Italy’s Monte dei Paschi, the world’s oldest bank

Four years after spending €5.4 billion ($6.3bn) to rescue it, Rome is in talks to sell Monte dei Paschi (BMPS.MI) to UniCredit (CRDI.MI) and cut its 64% stake in the Tuscan bank, writes Valentina Za, Reuters.

Here is a timeline of key events in the recent history of Monte dei Paschi (MPS), which have made it the epitome of Italy’s banking nightmare.

NOVEMBER 2007 – MPS buys Antonveneta from Santander (SAN.MC) for €9bn in cash, just months after the Spanish bank paid €6.6bn for the Italian regional lender.

JANUARY 2008 – MPS announces a €5bn rights issue, a €1bn convertible financial instrument called Fresh 2008, €2bn in subordinated, hybrid capital bonds and a €1.95bn bridge loan to fund the Antonveneta deal.

MARCH 2008 – The Bank of Italy, led by Mario Draghi, approves the Antonveneta takeover subject to MPS rebuilding its capital.

MARCH 2009 – MPS sells €1.9bn in special bonds to Italy’s Treasury to shore up its finances.

JULY 2011 – MPS raises €2.15bn in a rights issue ahead of European stress test results.

SEPTEMBER 2011 – The Bank of Italy provides €6bn in emergency liquidity to MPS through repo deals as the euro zone sovereign debt crisis escalates.

DECEMBER 2011 – The European Banking Authority sets MPS’ capital shortfall at 3.267 billion euros as part of a general recommendation to 71 lenders to boost their capital reserves.

FEBRUARY 2012 – MPS cuts its capital needs by €1bn by converting hybrid capital instruments into shares.

MARCH 2012 – MPS posts a €4.7bn 2011 loss after billions of goodwill writedowns on deals including Antonveneta.

MAY 2012 – Italian police search MPS headquarters as prosecutors investigate whether it misled regulators over the Antonveneta acquisition.

JUNE 2012 – MPS says it needs €1.3bn in capital to comply with EBA’s recommendation.

JUNE 2012 – MPS asks Italy’s Treasury to underwrite up to another €2bn in special bonds.

OCTOBER 2012 – Shareholders approve a €1bn share issue aimed at new investors.

FEBRUARY 2013 – MPS says losses stemming from three 2006-09 derivatives trades amount to €730m.

MARCH 2013 – MPS loses €3.17bn in 2012, hit by plunging prices on its large Italian government bond holdings.

MARCH 2014 – MPS posts 2013 net loss of €1.44bn.

JUNE 2014 – MPS raises €5bn in a deeply discounted rights issue and repays the state €3.1bn.

OCTOBER 2014 – MPS emerges as the worst performer in Europe-wide stress tests with a capital shortfall of €2.1bn.

OCTOBER 2014 – The former MPS chairman, chief executive and finance chief are sentenced to three-and-a-half years in jail after being found guilty of misleading regulators.

NOVEMBER 2014 – MPS plans to raise up to €2.5bn after stress tests results.

JUNE 2015 – MPS raises €3bn in cash having upped the size of its rights issue after posting a €5.3bn net loss for 2014 on record bad loan writedowns. It repays the remaining €1.1bn state underwritten special bond.

JULY 2016 – MPS announces a new €5bn rights issue and plans to offload €28bn euros in bad loans as European bank stress tests show it would have negative equity in a slump.

DECEMBER 2016 – MPS turns to the state for help under a precautionary recapitalisation scheme after its cash call fails. The ECB sets the bank’s capital needs at €8.8bn.

JULY 2017 – After the ECB declares MPS solvent, the EU Commission clears the bailout at a cost of €5.4bn for the state in return for a 68% stake. Private investors contribute €2.8bn for a total of €8.2bn.

FEBRUARY 2018 – MPS swings to profit in 2018 but says its updated projections are below EU agreed restructuring targets.

OCTOBER 2018 – MPS completes Europe’s biggest bad loan securitisation deal, shedding 24 billion euros in bad debts.

FEBRUARY 2020 – MPS posts €1bn 2019 loss.

MAY 2020 – CEO Marco Morelli steps down urging Rome to secure a partner for MPS as soon as possible. He is replaced by 5-Star backed Guido Bastianini.

AUGUST 2020 – Italy sets aside €1.5bn to help MPS as it works to meet a mid-2022 re-privatization deadline.

OCTOBER 2020 – MPS shareholders approve a state-sponsored plan to cut soured loans to 4.3% of total lending. Italy’s stake falls to 64% as a decree paves the way for its sale.

OCTOBER 2020 – A Milan court convicts MPS’ former CEO and chairman for false accounting in a surprise decision that forces MPS to boost legal risk provisions.

DECEMBER 2020 – MPS says it needs up to €2.5bn in capital.

DECEMBER 2020 – Italy approves tax incentives for bank mergers entailing a €2.3bn benefit for an MPS buyer.

JANUARY 2021 – MPS says to open its books to potential partners.

FEBRUARY 2021 – MPS posts €1.69bn loss for 2020.

APRIL 2021 – Andrea Orcel takes over as UniCredit CEO.

JULY 2021 – UniCredit enters exclusive talks with Italy’s Treasury to buy “selected parts” of MPS, a day before European banking stress test results show the smaller bank’s capital would be wiped out in a slump.

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