On 29 July, following months of closed-door manoeuvring and a management overhaul involving the exit of its CEO, Jean-Pierre Mustier, Unicredit issued its ‘preconditions’ for considering the acquisition of Italian bank Monte dei Paschi di Siena. Founded in 1472 and repeatedly in distress in recent years, MPS was nationalised in 2017 after failing the European stress tests.
Since then, the Italian state has been under pressure from the European Union’s competition arm to sell its majority stake by end-2021, but no acquirer was ever found. Unicredit’s conditions to even consider a deal are draconian: all dubious loans, legal challenges, capital charges, unprofitable branches, staff redundancies and more should be left out of the deal and taken care of fully by the Italian state. It is hard to envisage the burden for Italian taxpayers falling below €10bn, on top of the several billions already lost as a result of the 2017 nationalisation.
Unicredit’s due diligence is in progress and results are expected any week now. Lately, the Italian government seems inclined to postpone decisions pending local elections, taking place by coincidence precisely in the municipalities around Siena.
A painful story but, after all, an internal Italian one? Hardly.