Milan

MPS stock rises 7.7% on better-than-expected results

Troubled bank reports 100 mln euros Q1 loss, revenues stable

MPS stock rises 7.7% on better-than-expected results

Milan, May 15 - The financially creaking, scandal-mired Italian bank Monte dei Paschi di Siena (MPS) saw its stock rise 7.7% to 0.22 euros on Wednesday after issuing better-than-expected first-quarter results. The world's oldest bank - and Italy's third-largest lender - said it was just 100 million euros in the red, whereas analysts expected losses of 154 million euros. It also said it had staunched a decline in revenues despite scandal and controversy that have swirled around Italy's third-largest lender since January. MPS CEO Fabrizio Viola told analysts in a conference call the bank will work "belly to the ground up to the last day of the year to try to pay off the interest on the Monti bonds" to ward off the threat of state control. MPS said in late April it might not be able to repay the controversial government bailout, commonly called "Monti bonds" after ex-premier Mario Monti whose technical government shepherded the deal through. The president of the Tuscan bank, Alessandro Profumo in April said it was "not certain" that MPS be able to refund the four-billion-euro package, which allows the state to take bank equity if it defaults. Repaying the government bailout is "the main challenge" facing the bank, Profumo said. However Profumo, who previously served as chief executive of Italy's biggest commercial bank UniCredit, said the lender was on the right track. "The bank has totally turned a corner with respect to the past in terms of transparency and capital solidity," Profumo said. Profumo also signaled that restructuring had improved competitiveness, though the bank still needed to work on profitability. MPS in recent months revealed losses of more than three billion euros last year, and is at the centre of a huge fraud probe after a scandal over shady derivatives operations exploded in January. It has since emerged that a previously undisclosed series of derivative and structured-finance deals produced losses of around 720 million euros. Senior officials from MPS are facing penalties totalling as much as five million euros from the Bank of Italy for alleged fraud and corruption. In late April, an Italian judge rejected a prosecutors' order for 1.8 billion euros of assets held by Japanese investment bank Nomura to be seized as part of the probe into the scandal. Prosecutors ordered the seizure earlier this month and said they had put Nomura's former chief executive in Europe, the Middle East and Africa under investigation. Nomura was involved in one of a series of suspect derivative and structured-finance deals involving MPS. Prosecutors said Sadeq Sayeed, the former head of Nomura International plc, was being probed along with another manager from the Japanese investment bank, Raffaele Ricci. The prosecutors said the Nomura seizure regarded 88 million euros of hidden commissions received by Nomura and 1.7 billion euros of funds deposited with Nomura by MPS by way of collateral for a loan. But a judge said there was no urgent need to seize the assets. The judge also overruled an order to seize 14 million euros belonging to former MPS chairman Giuseppe Mussari, former general manager Antonio Vigni and former finance chief Gianluca Baldassarri. Sayeed, Ricci, Mussari, Vigni and Baldassarri are being probed for crimes including usury, aggravated fraud, obstructing banking watchdogs and issuing false statements. The judge on Saturday expressed doubts about the validity of the possible charges of usury and fraud. Mussari last year resigned from MPS and stepped down from his subsequent post as chairman of the banking association ABI after the scandal exploded in January. Baldassarri is under house arrest. There are also suspicions senior MPS managers were involved in alleged corruption in the nine-billion-euro acquisition of rival bank Antonveneta, at least two billion above its market value, in 2008. David Rossi, MPS's communications chief, committed suicide in March by throwing himself out of a window at the bank's headquarters in Tuscany. He was not being probed.

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