Launch in the middle of the night to the decree-law "save the banks", basically a crutch in all public credit institutions in difficulty. Convened to closed markets, the Council of ministers, extraordinary started at 23.35 approved the long-awaited decree law with measures for the protection of the investors provided for by the plan of intervention is put on the field last Monday by the Government to save Monte dei Paschi di Siena.
a Few hours after, the board of directors of Monte dei Paschi – that in the evening he had taken note of the failed capital increase on the market – has initiated the process of nationalisation with the request of financial support the extraordinary and temporary recapitalisation of precaution foreseen by the european directive Brrd. The bank added that, in consistency with the measures of the Government will present a proposal to the retail investors and the holders of the obligation subject to the 2 billion issued in 2008 “to end or prevent litigation” related to the sale of that security.
How does the decree save savings
The bottom 20 billion of additional indebtedness authorized on Wednesday by the Parliament will be used for recapitalisation measures and guarantees on liquidity for the banks that ask, then, is not only for the Mps. The free way the measure is arrived while the Board of directors of the bank of siena was still together in Milan after the certificate, in the afternoon, the failure of increased private capital. A combination that has allowed the same board of directors to immediately activate the procedure for requesting public intervention, as provided by the decree.
Here is the decree to save the banks
Gentiloni decree “salvarisparmio” launched after the ok button of the Parliament
The decree, stressed the chairman of the Board Paolo Gentiloni during a press conference the night with at the side the holder of the Economy Pier Carlo Padoan, “it reassures investors and the future of Mps”. The Government has, in fact, defined in the decree law as a measure “salvarisparmio” based “on the authorization received from the Parliament with a wide majority”. “We have moved as a result of taking note of Mps of the termination of the operation of the market, “concluded Gentiloni – and we agreed with the european authorities the modalities of this intervention”.
Liquidity and recapitalisation, enter the Status
The impact on savers
the intervention of The State to the rescue of Mps is much more soft compared to the losses which would have resulted in a rescue procedure internal, that is, a bail-in; but is not devoid of effect as it would have been, if it had not failed, a capital increase operation on the market. We see the consequences for a category of investors:
subordinated Bonds. Is reset the operation of voluntary initiated the last week of the conversion of the bond into action. Take instead a different mechanism, with the public intervention, it still requires that initially the conversion of all the subordinated bonds into shares of the bank. It is, however, expected, as explained in the Palazzo Chigi, a compensation for the protection of investors which is described as follows in summary: the Treasury may purchase such shares. At the end of the compensation procedure oriented to protect the savers, those who initially hold subordinated bonds would then have ordinary bonds, are not subject, therefore, to losses. So in summary the compensation scheme:
1) The bank proposes to trade the shares in result of conversion of subordinated bonds with obligations that are not subordinated to the new emission.
2) The Treasury buys the shares traded with the obligations that are not subordinated to the new issue. The practical r esult, "at the end of the compensation procedure directed at protecting investors", is "that those who initially hold subordinated bonds would then have obligations that are not subordinated". The conversion of the bonds – Tier 1 subscribed by institutional customers – will come at a value corresponding to 75 percent of the par value; The conversion of the bonds Tier 2 capital – subscribed by retail customers – will come at a value corresponding to 100% of the par value.
Saving the banks / In the Usa only Lehman left to itself
Debentures subordinated. There are no consequences. The direct effects of the mechanism of State intervention is limited only to the subordinated bonds.
Shares. No direct consequence to the holders of shares. The effects, if any, for those securities in its portfolio “Banca Mps” are exclusively related to the trends in Stock of the title at Piazza Affari. An increase of capital, as will happen
with the intervention of the State, has as a characteristic effect of a decline in value due to a dilutive effect (increase of the number of shares in the complex "representing" the same value, the one that the market recognizes to the listed company); in this case, however, is an effect that appears to be already discounted by the market because it is known from the time the amount of capital injection is required (the same operation failed on the market.
current Accounts. The mechanism of intervention of the State will not have any effect on curre nt accounts. The risks were only related to any procedure of Bail-in, a case in which would have protected customers ‘ deposits only up to the threshold of one hundred thousand euros. But neither above nor below this threshold will happen at all.
Deposits and other securities: None of the hypotheses of intervention possible would have had no effect on safety deposit boxes, securities, funds and portfolio management.
The nodes to dissolve the post save-banks
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Plan by 20 billion authorised by Parliament
The launch of the measure following to the a free Parliament, by an absolute majority, the increase in public debt up to € 20 billion (in a non-structural manner, because the measure save the banks is to be considered one-time) stressed on Wednesday by the Government just to fund the rescue of banks in difficulty. In summary, the decree prepared by via XX settembre discipline the creation of an ad hoc fund (to be financed by the issuance of new public debt securities), which operates on two fronts, the liquidity with the collateral and the assets with the recapitalization, and is intended to support the banks at risk. The new tool is aimed, in particular, to allow the government takeover of Mps – the third in the bank of Italy, considered the oldest credit institution of the world – and the Treasure that is destined to become the shareholder of reference, and then put back the allowances on the market, and vola t reclaimed from the institute. The prop, the audience will take the form of a recapitalisation, “precautionary” and “temporary” in order to reinforce the heritage of the Monte dei Paschi in the frame of the european Directive Brrd, operational from the beginning of 2016, which introduces the principle of the so-called bail-in.
the Mps in voltage, today the board of directors for the closing of the increase in
Failed to strengthen the balance sheet Mps
After the close of the institutional offer, to make official the failure of the operation was a press release issued by the Mps in the early evening. The note has confirmed a collection of low orders of the investment necessary to reach the amount of 5 billion allocated to the strengthening of the balance sheet, despite the positive outcome of the exercise of liability management that has registered the voluntary conversion of subordinated bonds into shares, for a total of 2.45 billion euros. The absence of large investors willing to for a significant investment, has explained to Mps, has had a negative impact on the investment decisions of institutional, limiting significantly the subscription orders. Now the subordinated bonds of Mps is vested in accession to the offerings of the bank, has clarified the note, will be returned to the respective carriers.
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