Advise on MPS privatisation: Italy handpicks Bank of America, Orrick
November 29, 2020
Finance

Advise on MPS privatisation: Italy handpicks Bank of America, Orrick

ROME (ITALY) – Italy’s Treasury has picked Bank of America and Orrick as financial and legal advisers to secure a merger deal for bailed-out bank Monte dei Paschi (MPS) as part of its privatisation plan, four sources close to the matter said.

Rome aims to clinch a merger with a healthier peer in 2021, the sources said, to provide a long-term solution for the bank, which has been backed by the government since 2017 following an 8 billion euro ($9.5 billion) rescue deal.

The Treasury’s efforts, however, face resistance from the co-ruling 5-Star party, as well as unions and local politicians in Tuscany, who have been asking for the sale to be delayed.

The mandates, which will last 12 months, will see Bank of America’s co-head of the financial institution group, Giorgio Cocini, and Orrick’s partners, Patrizio Messina and Marco Nicolini, working closely with the Treasury to attract buyers and address the bank’s capital shortfalls.

Italy’s Treasury and Bank of America declined to comment, while Orrick was not immediately available.

Rome is expected to pay about 150,000 euros in financial and legal fees, with the lion’s share going to Bank of America, the sources said.

The meagre fee pot has put off many banks and law firms which initially looked at the dossier, the sources said, as advisory fees typically come in the millions of dollars range. Intesa SanPaolo’s recent takeover of UBI Banca, for example, generated overall fees of $43.8 million for all the advisers involved, according to Refinitiv estimates.

Generally, government work across the world is poorly paid, but banks often vie for such mandates to build a relationship with the state in the hope of getting future business.

Dogged by legal claims and poor quality assets, MPS is a tough sell in Italy’s banking market, which has a surplus of branches and has seen a rise in loan losses and remote banking in the COVID-19 pandemic.

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