Banca Monte dei Paschi di Siena S.p.A. (), known as BMPS or just MPS, is an Italian bank. Tracing its history to a mount of piety founded in 1472 () and established in its present form in 1624 (), it is the world's oldest bank, and after the acquisition of Mediobanca in 2025 it is the third largest Italian bank.
In 1995, the bank (then known as Monte dei Paschi di Siena) was transformed from a statutory corporation to a limited company called Banca Monte dei Paschi di Siena (Banca MPS). The Fondazione Monte dei Paschi di Siena was created to continue the charitable functions of the bank and to be, until the bailout in 2013, its largest single shareholder. In 2016–17, BMPS was struggling to avoid a collapse, and it was bailed out again by the Italian government in July 2017.
In 2020, BMPS had approximately 1,400 branches, 21,000 employees and 3.9 million customers in Italy, as well as branches and businesses abroad. A subsidiary, MPS Capital Services, handles corporate and investment banking. It has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and as a consequence is directly supervised by the European Central Bank.
History Banca Monte dei Paschi di Siena traces its history to a mount of piety (monte di pietà) founded by order of the Magistrature of the Republic of Siena on 4 March 1472, when its statute was approved. It is therefore often regarded as being the oldest bank in the world in continuous operation. The basis of its foundation is the Statuto dei Paschi, written in 1419, a law that regulated all activities related to agriculture and pastoralism in Maremma.
Its current form dates from 1624, when Siena was incorporated into the Grand Duchy of Tuscany and Grand Duke Ferdinando II granted to depositors of Monte, in their warranty, the income of the state-owned pastures of Maremma (the so-called "Paschi" which gave the bank its name). The bank consolidated and increased its banking activity during the 17th and 18th centuries.
With the unification of Italy, the bank expanded its business throughout the Italian Peninsula, initiating new activities, including mortgage loans, the first experience in Italy. It was still state-owned by the late 19th century.
In 1988, MPS was involved in the bail-out of Cassa di Risparmio di Prato, becoming the major shareholder.
In 1995, a decree of the Ministry of the Treasury of the Italian Republic dated 8 August 1995, gave rise to two institutions: Banca Monte dei Paschi di Siena S.p.A. and Fondazione Monte dei Paschi di Siena, a non-profit organization with the statutory purpose of providing assistance, charity and social utility in the fields of education, science, health and art, especially with reference to the city and the province of Siena.
On 25 June 1999, Banca Monte dei Paschi di Siena was listed successfully on the Italian Stock Exchange.
Expansion (2000–2006)
After its debut on the Italian Stock Exchange, the bank began an intense phase of commercial and operational expansion. The bank acquired some regional banks: Banca Agricola Mantovana and Banca del Salento, while subsidiary Banca Toscana was absorbed. In 2003, the controlling interests (79%) of Cassa di Risparmio di Prato was sold to Banca Popolare di Vicenza in March 2003 for €411.2 million. The bank had also started a process to reinforce the structures of production in strategic market segments through the development of product companies:
Consum.it in the sector of consumer credit MPS Leasing and Factoring in the parabanking sector MPS Finance in investment banking MP Asset Management SGR in managed savings MPS Personale in financial promotion MPS Banca per l'Impresa in credit for businesses and corporate finance services
At the same time, the bank upgraded its commercial productivity, with the aim of improving the level of assistance and consultancy to investors and businesses, and updated its activities in private banking and in private pension plans. At the conclusion of this plan of expansion, the bank implemented a vast program of opening new branches of the Group, with more than 2,000 branches. In order to finance this expansion model, the bank entered into some derivatives that were hidden: operations Santorini in 2002 and Alexandria in 2006."doppio-flop-derivati" (in Italian), Ilsole24ore 24 January 2013.
Antonveneta acquisition (2006–2008) On 8 November 2007, Monte dei Paschi di Siena announced that it had reached an agreement with Banco Santander to buy Banca Antonveneta for €9 billion excluding the subsidiary Interbanca that is owned by the Spanish bank. Antonveneta is the bank that after the Bancopoli scandal was acquired by ABN AMRO and was supposed to go to Banco Santander after the purchase of the Dutch bank by the consortium of RBS, Santander, Fortis.
From February 2007 to June 2008 Banca MPS sold all the shares (27.839%) in Finsoe, an intermediate holding company of Unipol Group, for €584.8 million. In 2008, Quadrifoglio Vita, a joint venture insurance company of Unipol and Banca Agricola Mantovana, was acquired by Axa from Unipol via Banca MPS, Banca Agricola Mantovana was also absorbed into Banca MPS.
Banca MPS also acquired regional bank Cassa di Risparmio di Biella e Vercelli from Intesa Sanpaolo in December 2007 for about €399 million.
After the 2008 financial crisis
After rising yields and declining valuations on Italian government debt during the Euro area crisis, MPS lost over $2 billion in the first half of 2012, had to recapitalize, and faced restructuring or worse. The majority owner until the recapitalization, the Fondazione Monte dei Paschi di Siena, long resisted issuing new capital which would dilute its holding. In September 2012, even after the dilution, the bank "appear[ed] poised" also to give the national government a greater ownership stake in return for more capital.Birnbaum, Michael, "In Italy, world's oldest bank faces uncertain future", Washington Post, 1 September 2012. Retrieved 2 September 2012.
In December 2012, Cassa di Risparmio di Biella e Vercelli was sold to Cassa di Risparmio di Asti for about €205.5 million.
Hidden losses and Bank of Italy bailout (2013) In 2009, the Santorini and Alessandria operations began creating huge losses. In order to hide them in the bank's financial statements, the top management, including Giuseppe Mussari, the bank president, chose to enter into derivative contracts with Deutsche Bank and Nomura. This arrangement eventually led to prison sentences for 13 bank executives.
Estimates of the losses accumulated by the Santorini and Alessandria operations in the period leading up to the derivative contracts range from €500 to €750 million."ombre-derivati-monte-titolo" (in Italian), Ilsole24ore, 24 January 2013. The documentation concerning these operations was never communicated to the bank's own auditors or the Banca d'Italia. The derivative contracts and related documentation were discovered and made public by the new board of the bank at the end of November 2012. The documentation was then forwarded to the Banca d'Italia between December 2012 and mid-January 2013. The shareholders and the analysts have ascertained that the bank had not declared losses from derivatives. On 22 January 2013, the bank's shares lost 5.6% on the stock exchange and Mussari resigned as president of Associazione Bancaria Italiana."mussari-lascia-presidenza" (in Italian) Ilsole24ore, 22 January 2013.
On 23 January 2013, the scandal of the hidden derivatives was revealed. The bank's shares dropped 8.43% on the stock exchange that day,"borsa-tokyo-chiude" (in Italian), Ilsole24ore, 23 January 2013. and another 8% the next day."eurozona-atteso-calo-lindice" (in Italian), Ilsole24ore, 24 January 2013.
On 25 January 2013, an extraordinary general meeting of the shareholders of the bank was convened. They resolved to grant the Board of Directors the power to increase the share capital by a maximum amount of €4.5 billion to service the exercise of conversion rights of the bank of the Monti bonds. MPS called for an intervention of €3.9 billion, including €1.9 billion for the replacement of the previous Tremonti bonds.
The delegation of the extraordinary powers to the Board of Directors has also included the possibility of increasing the share capital of €2 billion at the exclusive service of the payment of interest payable in shares. The shareholders approved with a 98% vote in favour."assemblea-mps" (in Italian), ilsole24ore.com, 25 January 2013.
After the vote, the bank recovered 11.36% on the stock exchange after having lost more than 20% of its value in three sessions in three days."borsa-tokyo-chiude-forte" (in Italian), Ilsole24ore, 25 January 2013.
On 26 January 2013 the Banca d'Italia (Bank of Italy) approved a bailout request from the bank for €3.9 billion ($5.3 billion).Mozee, Carla, "Bank of Italy OKs bailout for scandal-hit bank", MarketWatch, 26 January 2013. Retrieved 26 January 2013.
The firm sparked fresh controversy in 2013 when it was accused of misleading Italy's market regulator in October 2012, shortly before it received a 4.1-billion euro ($5.47 billion) state bailout.
On 29 December 2013, Fondazione Monte dei Paschi di Siena rejected plans for issuing €3 billion worth of new shares, delaying the raising of capital until at least May 2014 and increasing the risk of nationalization.
In November 2019, after a three-year trial, 13 former bank executives received prison sentences. The Monte dei Paschi ex-chairman and CEO received seven years each; two senior executives five and four years. Three bankers from Deutsche Bank received five years and two from Nomura received five and three years. The court decided that they had conspired to hide Monte dei Paschi's losses of €2bn between 2008 and 2012 by using complicated derivative contracts. Deutsche Bank and Nomura were fined €160m; Monte dei Paschi had paid €10.6m after a plea bargain in 2016."The men from Monte", Private Eye, no. 1509, p 41, 15 November 2019
Following an appeal, in May 2022, a Milan appeals court ruling overturned the 2019 conviction of the former executives and the two banks over derivative deals and cancelled the seizures imposed on Deutsche Bank and Nomura Holdings Inc. In October 2023, Italy's Supreme Court of Cassation confirmed the acquittals in Monte dei Paschi derivatives case.
A very slow recovery (2014–2022) In March 2014, BlackRock declared a 5.748 percent stake in the bank (as the bank was still a constituent of stock market indices at that time, such as the FTSE MIB, fund managers held stakes in their index tracking funds, and were required to disclose stakes of 5% or higher). In July, the capital increase was completed, of which the banking foundation had just owned 2.500% shares. In October, the bank failed the ECB's stress test of major European banks, (first Comprehensive Assessment of European Banking Supervision) and was given two weeks to prepare a plan to raise €2.11 billion in capital. Despite issuing €5 billion in shares just four months earlier, the ECB declared the bank unable to withstand a financial catastrophe. Shares proceeded to drop 22%."clock-ticks-for-banca-monte-dei-paschi", online.wsj.com In November, 2014, the bank reported a loss of €1.1497 billion in the 3rd quarter of the year."Nearly $1 billion loss for 3rd quarter", New York Times, 12 November 2014. Eventually in 2014 financial year, the bank had a net loss of €5.3429 billion, resulting in the capital increase to be vaporized. The Tier 1 capital ratio of the bank was 8.7% as at 31 December 2014.