Italy: MPS sees ‘safe habour’ ahead after strong quarter

Milan: Italian state-owned bank Monte dei Paschi di Siena (MPS) (BMPS.MI) on Wednesday joined peers in solidly beating profit forecasts, thanks to a boost from higher interest rates.

MPS also began to reap the benefits of cost cuts in the fourth quarter ending Dec. 31, after using part of the proceeds from a make-or-break 2.5 billion euro ($2.7 billion) new share sale in November to pay for costly voluntary early staff exits.

“After a long and difficult sailing at sight … we’re in a position to choose the best safe harbour … and we will get there for sure,” said CEO Luigi Lovaglio, who took over at MPS exactly a year ago and who will run for reappointment in April.

Between the latest cash call and a 2017 bailout, Italian taxpayers have pumped a total of 7 billion euros into the Tuscan bank, which is 64%-owned by the state. The government is expected to look for a buyer after it names a new board in April, allowing it to cut its holding as agreed with the European Union.

Italy failed to clinch a sale of MPS to UniCredit (CRDI.MI) in 2021 and won more time from the EU for its exit.

In the quarter, MPS increased its capital buffers by nearly one percentage point, including by reducing its risk-weighted assets (RWA) ahead of an expected RWA increase driven by regulation.