The government's 20-billion-euro
'save-savings' decree enables the State to intervene "promptly"
so that troubled Tuscan lender Monte dei Paschi di Siena (MPS)
will undergo a "definitive recovery", Economy Minister Pier
Carlo Padoan said Thursday.
He said "the precautional recapitalisation is temporary and
the definitively recovered bank will return to the market".
The government is set to put billions of euros - initially
estimated by the government at five billion, later estimated by
the European Commission at 8.8 - into MPS to help it recover
after a liquidity crisis and under the punishing weight of
non-performing loans (NPLs).
A new MPS board will be named after the precautional
recapitalisation, Padoan said in a wide-ranging report to
parliament.
The primary goal of the new management team will be to
implement a restructuring plan, he told parliament on the
government's 20-billion-euro 'save-savings' decree which is to
be implemented after negotiations with the European Central Bank
and the European Commission.
Padoan added: "The MPS management, which has shown
willingness to tender its resignation, enjoys the government's
confidence".
MPS is undergoing a State-sponsored turnaround after coming
last in European stress tests because of its heavy load of
non-performing loans (NPls).
Padoan warned against "discrediting" the banking system.
He said the "essential factor" for its proper working
was trust, which was "easy to destroy but hard to build up
again".
Padoan said it was "wrong and dangerous" to undermine
confidence.
Undermining trust could "jeopardise the entire system",
Padoan warned.
Padoan went on to say "the government hopes that justice will
swiftly run its course and all those who have damaged the
national community, local communities, savers and investors will
be sanctioned".
Padoan said, on managers who sold risky bonds to
those unaware of the risks, that "the magistrature should
identify responsibilities and adequately sanction those found
guilty".
Managers in four rescued banks - Banca Etruria, Banca Marche,
CariFe and CariChieti - have been accused of selling junior
binds to people who were not properly informed of the risks
entailed.
One Banca Etruria bondholder killed himself after
losing his life savings.
Retail bondholders in the four rescued banks will be
automatically reimbursed "about an estimated 190 million" when
all procedures have been completed, Padoan said.
The government is set to compensate many holders of junior
bonds who were jipped because they were not informed of the
risks attached to those financial instruments.
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