The Banking and Strategy Initiative

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Monte De Paschi state aid not Basel III, Lloyd close to selling 600 branches | Banking insight

Monte De Paschi de Siena is getting new state aid from Mario Monti’s government of upto EUR 3.5 B to make a pitstop as it was marked by EBA in the recent stress tests for a EUR 3.27 B shortfall. Italy’s #3 bank by assets expects to return to profit by 2015 but before that it may have to return the 3 year loans back and thus the Capital would not count under the new Basel Ii rules and keep lenders asking for more from the bank as it tries to come back to profit in a new plan by 2015 ( Hat Tip: Reuters Insider, Breaking Views) Monte de Paschi de Siena or MPS as set up as early as 1472

ROME, ITALY - NOVEMBER 18:  Prime Minister Des...

ROME, ITALY – NOVEMBER 18: Prime Minister Designate Mario Monti attends a second vote of confidence for the government in the Italian Chamber of Deputies on November 18, 2011 in Rome, Italy. Italy’s Prime Minister designate Mario Monti presented his government’s program at the senate yesterday , pledging economic reforms and austerity measures aimed at reassuring investors and rescuing the country from its financial difficulties. Mario Monti’s government of technocrats then faced a vote of confidence in the senate which they won by 281 votes to 25. (Image credit: Getty Images via @daylife)

Meanwhile Lloyds Bank of UK, 83% owned by the government is selling its UK retail business of close to 600 branches to Coop, awell known domestic British name. Lloyds needs to sell the 632 branches under a EU state aid agreement by 2013 and the other bidder NBNK investments has also filed a revised bid. If Lloyds does indeed go with Coop NBNK’s hopes of getting a new UK high street bank up and running will be permanently lost. The 600 branches would give NBNK a 4-6% high street share in the UK. Virgin managed a deal for Northern Rock and apparently retailer TESCO has not shelved its plan for a bank with its co branded store cards. Retail was 47% of the bank’s income in 2011. it paid GBP 3 B in PPI fines to end with a GBP 3 B loss in 2011. The bank has a GBP 350 B of  Balance Sheet with GBP 47 B in Equity and a deposit Loan ratio of 75% a healthy mix otherwise but is actively deleveraging yet cutting non core group funded assets

Meanwhile RBS is still having difficulty selling any of its European businesses on the Disposal list

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