Banks: Unicredit negotiates the acquisition of Monte dei Paschi – economy

Andrea Orcel could have a palace if he wanted to. Specifically the ancient Palazzo Salimbeni, located in the middle of the old town of Siena, in the middle of the picturesque hills of Tuscany. Here is the headquarters of Monte dei Paschi di Siena, the oldest bank in the world. And Orcel now wants to negotiate whether the banking group Unicredit, which he heads, will take over this financial institution – at least its good shares.

Because Monte dei Paschi as a whole is not only old, but also quite broken. So broken that the Italian state had to save the bank in 2017 and has since been the largest shareholder with 64%. How things will turn out with Monte dei Paschi is therefore also a highly political question – with a clear deadline. The EU wants Rome to privatize the bank again by the end of the year. So now a solution could be found.

Hardly any other place in Italy is as closely tied to a business as Siena is at Monte dei Paschi. The city’s name is sometimes used as a synonym for the bank, which was founded in 1472, as it has always been so important here for politics, business, culture and sport. She was a patron and an employer. And it was a mess for local political interests – which ultimately, in the wake of the banking, financial and sovereign debt crisis, were also its ruin.

Since the privatization of the bank again, Unicredit has always been the dream partner of Rome. Two personalities testify to this: Pier Carlo Padoan and Jean Pierre Mustier. As Minister of Economic Affairs and Finance, Padoan once organized the state entry into Monte dei Paschi, and then at the end of 2020 he was appointed chairman of the appointed board of Unicredit. Shortly thereafter, then-CEO Mustier collapsed. The quarrel revolved around Monte dei Paschi: Padoan absolutely wanted the recovery, Mustier certainly not. Orcel then took over in April, but he was also very cautious at the start.

“We only buy parts of the business – parts that we determine”

But now he is negotiating with Rome. “The timing is good and the conditions could be good,” said Friday during the presentation of the quarterly figures – but: “Nothing has been decided yet”.

A complete takeover of Monte dei Paschi should not be, this is already certain. All risky positions in the books of the Sienese must remain with the state, as well as all old legal risks from the previous affairs of the bank. In addition, the operation should not increase Unicredit’s capital and bring significant savings. Interesting is the network of Sienese, who are mainly represented in the economically strong north and in the center of the country – Unicredit has so far focused more on central and southern Italy. That could add up to four million to the country’s 7.6 million current customers. “We only buy parts of the business – parts that we determine,” Orcel said. La Stampa newspaper commented: “In short, Orcel is expecting Santa Claus out of season.

There is also reluctance in Rome: Padoan’s successor as finance minister, Daniele Franco, has not commented on the news. Apparently, the government is worried that everything will fail in the end.

Open detailed view

Before Andrea Orcel joined Unicredit, he was supposed to be the head of the big Spanish bank Santander. The contract failed due to the dispute over the payment of wages.

(Photo: Sang Tan / AP)

Orcel is reinforced in the negotiations. The business of Unicredit is functioning, the profit increased in the second quarter more strongly than expected to more than one billion euros. In addition, the parent company of Münchner Hypo-Vereinsbank is more confident in the further development of the business. Adjusted profit will be over three billion euros this year, he said, cost and revenue targets have been confirmed. Investors are generally quite satisfied: Unicredit stock rose 6% in the morning, and while it continued to give up part of its profits, it remained solidly in the dark.

Orcel, who as head of the investment bank of the big Swiss bank UBS was one of the most important negotiators in Europe, has a long history with Monte dei Paschi. He played a key role as a consultant when the financial institution bought rival Banca Antonveneta for nine billion euros in 2007. In retrospect, observers have blamed the deal in part for Monte dei Paschi having had such big problems in the first place. Shortly before moving to Milan, Orcel was still under discussion as a boss in Siena.

The ECB is benevolent silent

In Frankfurt, at the European Central Bank’s (ECB) banking supervisory authority, they don’t want to comment on the possible takeover, not even in the background – which can be interpreted to mean that negotiations are there. followed with kindness. The ECB has been promoting the consolidation of the European banking market for years, preferably even across national borders. However, there is still a problem as the legal and regulatory differences make such transactions extremely complicated. If Monte dei Paschi were to disappear from the market at least in a national solution, Frankfurt would probably not be unhappy to have one less problem.

In Siena, on the other hand, they fear that they will soon have another problem. What will remain of the once proud heritage of the city during the takeover? What happens to the staff at the Monte dei Paschi headquarters, to the whole organization? The government of Rome is already brandishing the prospect of helping the Sienese. For example, it is planned to set up a large pool of pharmaceutical companies there in order to support employment in the region.

But what will happen to Palazzo Salimbeni remains to be seen for now. Love it so much. Orcel wants to make a decision on Monte dei Paschi by September. Will he then really also become Mr. Palast? Possible but doubtful.

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