State aid: Commission approves revised commitments by Italy for Banca Monte dei Paschi di Siena

4 Aug 2022 12:23 PM

The European Commission has approved, under EU State aid rules, a set of revised commitments submitted by Italy, replacing the original commitments on the basis of which the Commission had approved a precautionary recapitalisation of Banca Monte dei Paschi di Siena (‘MPS').

In July 2017, the Commission approved Italy's plan to support a precautionary recapitalisation of MPS, on the basis of commitments submitted by Italy. Under these commitments, the bank had to implement specific measures to restore its long-term viability, minimise distortions of competition and ensure an adequate own contribution to cover losses and restructuring costs. These commitments were first amended in September 2019. In addition, Italy had to sell its stake in the bank by a certain deadline.

Some of the original commitments had been timely implemented. In particular, MPS has reduced its bad loans and operating costs, it has improved its risk management policies and it has also respected a range of behavioral constraints. However, in July 2022, Italy asked for more time to fulfil certain other commitments, notably to sell its stake in MPS and for MPS to implement certain divestments and to continue its restructuring through a further reduction of the staff and of the operational costs relative to the revenues. To minimise possible distortions of competition caused by the extended deadline, Italy proposed a series of additional commitments, such as certain additional disposals and divestments, additional branch closures and the continued obligation to respect certain limitations on the way it conducts business.

The Commission assessed Italy's request under EU State aid rules, in particular the 2013 Banking Communication. The Commission concluded that: (i) the extension of the deadline to complete the restructuring of the bank and to achieve the sale of the stake of the Italian State in the bank is acceptable; and (ii) the set of revised commitments adequately counterbalances the revision of the deadline.

On this basis, the Commission concluded that the aid which Italy granted to MPS in July 2017 remains compatible with EU State aid rules, as the overall balance of the original decision was maintained and has approved the revised commitments.

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