Banca Monte dei Paschi di Siena - EGM 04 October 2020
The EGM is called to approve the demerger of Banca MPS' non-performing exposures in favour of the State-owned asset management company Amco SpA (item 2). Banca MPS' shareholders will receive Amco Class B Shares in exchange of the non-proportional cancellation of Banca MPS' shares held on the effective date of the demerger: the Ministry of Economy (68.2% of Banca MPS) will receive 90% of Amco Class B Shares, while minority shareholders will receive 10%. However, all minority shareholders will have the option not to receive Amco Class B Shares (so-called "Asymmetric Option") keeping unchanged their stake in Banca MPS. Amco Class B Shares will not grant the voting right and will not be traded on any regulated market.
The partial demerger of Banca MPS' non-performing exposures represents the completion of the de-risking plan included in the 2017-2021 Restructuring Plan, which was approved at the time of the acquisition by the Italian Government of 68.2% of Banca MPS' shares via a €8.8 billion rights issue in 2017. The transaction will allow Banca MPS to decrease its NPL ratio from 12.4% to 4.3%, below the threshold of 5% indicated by the EBA guidance. The Bank's CET 1 Fully Loaded ratio will decrease from 12.7% to 11.1%. However, the de-risking will likely cause a reduction in the cost of funding, and it will allow higher operational flexibility to the Bank, which will be finally able to focus on its core business.
We regret that the terms and conditions for the exercise of the Asymmetric Option were not made publicly available at the time of release of this analysis (September 15). However, we note that thanks to that Option, minority shareholders will have the right not to receive Amco Class B Shares, thus keeping unchanged their holdings in Banca MPS increasing at the same time their dividend and voting rights, due to the dilution of the stake held by the Ministry of Economy.
For all the above-mentioned reasons, we recommend shareholders to vote FOR.
Banca Monte dei Paschi di Siena Group is engaged in business areas such as leasing, factoring, corporate finance, investment banking and consumer credit. Co.'s Operating Segments are as follow: the Retail & Corporate division, made up by the Retail Banking and Corporate Banking segments, and the Corporate Centre. The Retail banking segment's areas of business include funding, lending, the provision of insurance products, financial and non-financial services (including through electronic payment instruments) to retail customers. The corporate banking segment's areas of business include lending and providing financial products and services to businesses.
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