n the morning, in Frankfurt, the Supervisory Board of the Single Supervisory Mechanism of the European Central Bank, the European banking supervisory body, meets to discuss the proposed sale of non-performing loans and the eventual recapitalization of Monte dei Paschi di Siena. In the afternoon, in Siena, the board of the lender meets over restructuring plan, including suggestions coming from the ECB.
It’s going to be a decisive day for the future of the Tuscanbank, forced to accelerate the disposal of non-performing loans (gross €27.7 billion, or around €10 billion, net of provisions) after the public request by the ECB to sell €10 billion of bad loans by 2018.
The proposal sent by MPS to the European supervisory body includes, based on the latest information, a maxi sale of the entire portfolio of NPLs through a securitization of €9.7 billion of net NPLs. Talks on this issue are at an advanced stage, although the outcome remains uncertain, with the Atlante fund expected to invest remaining resources for €1.7 billion (after the rescue of Veneto Banca and Popolare Vicenza) to buy the equity/mezzanine tranches of the securitization.
Around €6 billion of the new company that will buy the bad loans would be funded by JPMorgan through a one-year bridge loan, necessary to give time to restructure the senior tranche with the GACS guarantee scheme recently approved by the government. A remaining €2 billion correspond to the loss that MPS will have to take to sell the loans at a lower price than in its books.