The Italian Ministry of Economy and Finance recently sold 15% of Monte dei Paschi di Siena, one of the world’s oldest financial institutions. In 2017, the government had nationalized the bank in an attempt to save it, but in October 2023 the Italian Treasury decided on its privatization to make it more competitive. In November 2023, 25% of MPS shares had been sold, and another 12.5% were sold in March 2024.
In the most recent operation, the shares were distributed among four important players in the Italian financial landscape: Banco BPM, Anima SGR, Caltagirone and Delfin. In particular, Banco BPM is planning on buying Anima SGR, and buying part of MPS serves as a defensive move against any disruption in its acquisition plans.
This privatization is part of a bigger plan by the Italian government to pay off its debt. In fact, it has already started the privatization of other public entities, such as Poste Italiane, Eni and Ita Airways, with the intent to recover 20 billion euros in three years. The idea is to recover 1% of GDP for the end of the year.
It is unclear whether this move by the Italian government will be able to cover its debt, which has already reached 3 trillion euros. On a positive note, in the past year, MPS has been outperforming, with capital appreciations of up to 90% and positive projections for the end of the year. In any case, the question remains whether Italy’s implementation of its Budget Law will sufficiently stimulate the economy to offset the contracted debt, making privatizations less “painful.”
Author: Luis Cabezas