Losses and profits. The Alitalia case barely settled with the flight, in mid-October, of the new company ITA Airways, Mario Draghi has not finished with another sensitive issue: the rescue of Banca Monte dei Paschi di Siena (BMPS), which the president of the Italian council wanted to complete at the end of the year. Engaged several months ago between the Treasury and UniCredit, candidate for the takeover of the – best – activities of the world’s oldest banking establishment (1472), the negotiations failed on Sunday, October 24.
Andrea Orcel, boss of UniCredit, refused to degrade the balance sheet and the exposure of his establishment, accepting only profitable assets in the rich regions of the north and the center of the Peninsula. The State, for its part, was ready to socialize degraded activities and risky commitments in the defeasance structure which hosts the liabilities of other transalpine establishments. But the recapitalization, in particular to cover the elimination of part of the 21,000 jobs of BMPS, would have exceeded 7 billion euros, while Rome had already disbursed 5.4 billion in 2017 to take 64% of the Tuscan bank.
Strategic errors
The “banker” Draghi today inherits badly or unresolved industrial cases, such as those of the steelmaker Ilva, Alitalia, BMPS… The latter case resembles that of the airline company, settled after more than a decade of crisis : poor governance, strategic errors, too late consolidation of the sector, all against a backdrop of political instrumentalisation, government fragility and European pressures.
Mr. Draghi will have to put the book back on the job. Time is running out to find a solution respecting the commitment made in Brussels to “Reprivatize” BMPS by spring 2022 at the latest. The former Director General of the Treasury from 1991 to 2001, one of the main architects of the great privatization movement of the 1990s, knows where the interest of the Italian State lies. But the former head of the European Central Bank also knows the demands of the Commission. If the Covid-19 crisis has made it more accommodating, it remains inflexible on state aid. Sooner or later, we will have to get into the nails of the competition rules.