Member access

4-Traders Homepage  >  Shares  >  Italian Stock Exchange  >  Banca Monte dei Paschi di Siena SpA    BMPS   IT0001334587

News SummaryMost relevantAll newsSector news 

MPS Chairman: Italian Banks Are Solid

05/27/2012 | 09:56am US/Eastern

Banca Monte dei Paschi (>> Banca Monte dei Paschi di Siena SpA) Chairman Alessandro Profumo said Sunday that Italian banks are solid, and that he doesn't see any signs of bank runs in the country.

"They [Italian banks] hold lots of Italian sovereign bonds that some think they will not be repaid, but if they'll be repaid then banks are solid," Profumo said in an interview broadcast by Italian state TV channel Rai Tre.

He gave the example of the bank he chairs--often referred to as the world's oldest, and Italy's third largest--as a bank whose capital shortfalls depend only on its holdings of Italy's debt.

"The EUR3.26 billion of capital shortfall identified by the European Banking Authority depends only on the country's sovereign bonds we own," he said. MPS currently owns EUR26 billion of BTPs--the country's long term debt.

Profumo said all Italian banks bought those bonds because, until September 2011, these purchases didn't absorb capital and yields were attractive.

"Then rules changed," he said, referring to EBA's new rules which don't consider these sovereign bonds risk free and therefore have an impact on capital needs.

He added that to resolve the problems affecting European banks there is a need for further European integration. "Project bonds and euro-zone bonds will eventually arrive, I think," Profumo said.

Project bonds are debt instruments backed at euro-zone level which will be used to finance infrastructure projects, while euro-zone bonds are sovereign bonds backed by euro-zone countries.

However, while he's said to be optimist about the future of European integration, he conceded the euro is at risk and said he sees a more than 50% probability of a Greece's exit from the common currency.

In May, Banca Monte dei Paschi di Siena posted a 61.2% decline year-on-year in net profit for the first quarter, mainly due to large writedowns on its loan portfolio.

Profumo was nominated chairman of MPS in April. Previously, he was UniCredit Spa (>> UniCredit SpA)'s chief executive.

-By Giovanni Legorano, Dow Jones Newswires, +39 342 7006537;

Stocks mentioned in the article : Banca Monte dei Paschi di Siena SpA, UniCredit SpA
React to this article
02/27 BANCA MONTE DEI PASCHI DI SIENA : David Manuel Martinez has resigned from the Bo..
02/26 BANCA MONTE DEI PASCHI DI SIENA : ++ MPS says it will launch capital increase 'M..
02/26 BANCA MONTE DEI PASCHI DI SIENA : MPS to launch capital increase 'May or June' -..
02/25 Italy's approval of Monte dei Paschi deal raises new questions
02/25 Timeline - Monte dei Paschi's Antonveneta deal and its aftermath
02/18 BANCA MONTE DEI PASCHI DI SIENA : MPS: DBRS downgrades long- and short-term rati..
02/14 Italy's state will not be an active investor in Monte Paschi - chairman
02/13 BANCA MONTE DEI PASCHI DI SIENA : Oldest bank's losses grow
02/12 BANCA MONTE DEI PASCHI DI SIENA : MPS up 17.5% on Treasury stake prospect
02/12 BANCA MONTE DEI PASCHI DI SIENA : ++ Treasury to take stake in MPS for Monti Bon..
Income Statement Evolution
More Financials
Dynamic quotes