Wednesday, October 26, 2016

BMPS - Banca Monte dei Paschi di Siena (Updates)

Banca Monte dei Paschi di Siena is the oldest bank in the world and the Italian third largest commercial and retail bank by total assets. Founded in 1472 by the magistrate, the city state of Siena, Italy as a "mount of piety".  Mount of piety is an institutional pawnbroker run as a charity in Europe from the Late Middle Ages, till today.  Well, it looks as if personal property of the bank will be in a pawn shop.  Back in June on the 29th, 2007 BMPS (stock symbol) was $2040.74 on Sept 30th, 2016 she crashed down to 0.19 (cents) that would get ya to jump off the roof.  

On 25 June 1999, Banca Monte dei Paschi di Siena was listed successfully on the Italian Stock Exchange.  BMPS had some aggressive growth from 2000 to 2006 but as the world knows it we come to the financial crisis of 2008 and BMPS is no exception to the rule of the Betty Crocker Cook Books. (bad loan portfolio)  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 (Oh crap, we know how they're doing) and Nomura Securities International Inc.

There have been many plans put into the works to recapitalize the bank but all have failed from 2008.  A Black Hole if there ever was one, today BMPS will slash 2,500 jobs, reduce staff costs by about 10 percent and close 500 of its 2,000 branches over the next three years.  That's always the plan when you're going down, Sears has been doing the same thing for years.  But the many instruments BMPS has going for it that Sears has not is the banking cartel, drug cartel for laundering services, (Italy legalizes drugs and prostitution for GDP) the Vatican, printed money (bailout, QE) and the country of Italy herself piled on the backs of the people, just like always reverse allocation.  If this bank fails they're all going down sooner than expected.  The banks need WWIII to reset the debt and that was already supposed to happen, it was thought the banks could float the boat with the QE (quantitative easing) money, not happening. China and Russia are holding off WWIII.

So BMPS @ 0.30 yesterday, is it time to buy?  Who said you have to work for 40 years and bust your buns till you're old.  Be a better player on the Board of Monopoly, for the gig is up if BMPS goes down they're all going down and at which point what would it matter, we'd all be in the streets.  Watch this adjustment on BMPS like a hawk, you might be able to feather your nest.

Capitalism: The basis of the acquisition of wealth, one can capitalize on someone else's misfortune.


FTSE MIB Index the Italian national stock exchange

Update: 11/13/16

From Wolf Street 

JP Morgan Chase’s rescue of Monte dei Paschi, Italy’s third largest and most insolvent bank, is going nowhere, fast. Last month Goldman Sachs warned in a report that if the Italian public vote no in the referendum, (Dec 4th, 2016) on the government’s proposed constitutional reforms. Investors wait for the political uncertainty to clear before pledging further funds.

Update 12/5/16 

New listing Monday morning 12/5/16

Well, the vote over the weekend for reform came out NO! This morning looking at the stock quote we have a new listing with the same ticker symbol BMPS. Nov 25 Italy's Banca Monte dei Paschi di Siena said on Friday it has set the maximum price for new shares of a planned debt-to-equity swap at $24.90 euros per share. Looking at the chart the price was set at $20.00 and heading south. Recapitalization of 5 billion euros in debt into equity, bad move. 

Over the weekend (12/3/16) the stock was at 19 cents per share, I was waiting on that vote to see what would happen to BMPS.  I'll tell ya, this bank had a golden opportunity, people around the world could have bailed out this bank and at the same time would have boosted morale (people could have made money) by putting confidence in the financial system.  This would have been real investment money instead of more debt.  But no, more Betty Crocker accounting and the continuation of Titanic Banking!  

Since the shares were converted to the $20 dollar price you would have the correct dollar amount to value but not share amount, so we did not miss a big run up on this stock. The only offer at this point is placing Puts on the stock.  This scenario in finance restructuring is like giving money to a junkie who needs to pay a heating bill, what happens?  That's right, the heating bill doesn't get serviced and he or she only ends up with stimulation. In this case European Stability Mechanism of a possible $16 billion to recapitalize the Italian bank sector.  Rome has giving BMPS $2 billion to attract investors and must raise $5 billion by the end of  Dec 2016, to avoid being wound down or yet more stimulation. 

The Restructuring Missed
BMPS after Bailout (12/22/16
Since it's Christmas I'm going to point something out that can help these failing institutions. Instead of debt to equity swaps which are just piling up debt on the balance sheet with no course to new money because many banks are over leveraged which we're seeing here, the stock is already dropping.  Advertise to the world an investment opportunity and we'll use BMPS as an example.  At 19 cents a share when BMPS had a chance many folks might have been interested in saving the oldest bank in the world, I mean she's a museum piece. Word would have gotten out and new money would have poured in helping with the debt that's been mounting up.

Now that you have world attention this makes a community effort to bring in new business just by the buzz this would create. Not only that but the morale from the people knowing they just saved the oldest bank would carry merit in a new direction, the balance.  Work with people (your greatest asset) instead of building a house of cards, you're going to have to give up some control and allow those shareholders a voice by grouping the public as an investment partner where they're on the board of directors, I know that's hard to swallow but you're choking today.

Merry Christmas

Update 1/9/17

Why is this not news, BMPS halts trading after Dec 22, 2016.  I've been digging for weeks, well here's the Recon: Resolution no. 19840 (you'll have to translate from Italian) 

Temporary suspension of trading on regulated markets, multilateral trading facilities and systematic internalization systems in Italian with regard to securities issued or guaranteed by Banca Monte dei Paschi di Siena SpA and financial instruments whose underlying securities issued by Banca Monte dei Paschi di Siena SpA. 

BMPS did not meet the demand in raising 5 billion with investors before the end of Dec 2016.  Modern day Titanic but this time no message, damn the torpedoes this EU Ship is sliding under a Tsunami of toxic loans! and like the Titanic, there are not enough lifeboats. The EU is playing Footsie.

The FTSE aka "Footsie" was off 327 points in trading today Mon 1/9/17 

Update 2/23/17 

Former IMF Chief and Dozens of Former Bank Execs Just Got Sentenced to Jail

From Wolf Street's Don Quijones:

The unimaginable just happened in Spain: two former bank CEOs, Miguel Blesa (CEO of Caja Madrid) and Rodrigo Rato (CEO of Bankia) were just awarded prison sentences of six years and four-and-a-half years, respectively, for misappropriation of company funds.

Update 6/12/17

Spanish stock market regulator CNMV bans short sales, this measure was taken after considering the recent stock performance of Liberbank in the aftermath of Banco Popular’s rescue by the Single Resolution Board.  The money changers are in panic mode. All the tea in China will not save these manipulated markets.  The only money going into these failed banks is the bailout, next is the bail-In, your money in retirement accounts and savings is the only real money on this Monopoly Board.  Market manipulation is what should be banned. How is it a free market if you ban a move.

On a side note to send this home Deutsche Bank trader, David Liew, pleaded guilty (6/2/17) in federal court in Chicago on spoofing (manipulating) the market on precious metals.  This practice has been going on since 2010, all future traders were complaining, "who is shorting the metals?"  Well, we know now and the shorting continues!  Today there is no safe trading in this environment unless you purchased Bitcoin, where it's price (today $2552) should be the price of gold.

Update 11/6/2017

BMPS trading again: Monte dei Paschi di Siena may still be alive as a bank, but it’s not out of the woods.  Last week its stock resumed trading after ten months of being suspended from Italy’s benchmark index, the FTSE MBE. Shares opened on Wednesday at €4.10, then rose 28% to €5.26.  But it didn’t stick. On Friday, shares closed at €4.58.

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