Banca Monte dei Paschi di Siena: A Look at Its History and Future

Banca Monte dei Paschi di Siena has a rich history dating back to 1472, making it one of the oldest banks in the world. Founded by the Republic of Siena, it initially served as a pawnbroker and a lender to the city's merchants.

Its early success was largely due to the bank's innovative approach to lending, which allowed it to provide credit to merchants and traders at a time when traditional banking practices were limited. This strategy helped the bank to grow rapidly and establish itself as a major financial institution in Italy.

Today, Banca Monte dei Paschi di Siena is a leading bank in Italy, with a strong presence in the country's financial sector. Despite facing challenges in recent years, the bank remains committed to its core values of innovation, customer service, and community involvement.

Banca Monte dei Paschi di Siena has a rich history dating back to 1472 when its statute was approved, making it often regarded as the oldest bank in the world in continuous operation.

The bank's foundation is based on the Statuto dei Paschi, written in 1419, which regulated activities related to agriculture and pastoralism in Maremma. This laid the groundwork for the bank's future success.

In 1624, the bank's current form was established when Grand Duke Ferdinando II granted depositors of Monte the income of state-owned pastures of Maremma, known as the "Paschi", which gave the bank its name. The bank's business expanded throughout the Italian peninsula after the unification of Italy.

The bank's involvement in mortgage loans in the late 19th century was a significant development, and it was still state-owned at that time.

The Birth of Monte dei Paschi was a pivotal moment in the city's history. In 1557, the allied armies of Emperor Charles V and the Florentine Duke Cosimo de’ Medici awarded the ancient state of Siena as a feudal domain.

The Sienese were able to maintain some of their ancient magistracies, which had governed the republic for centuries. They also managed to get permission for the Monte Pio to resume activity.

On 14 October 1568, the Monte Pio was given a new charter similar to that of Florence’s Monte di Pietà. This marked a significant development in the institution's history.

The Monte Pio's account books reveal a progressive focus on agricultural and land credit and interest-bearing loans. This shows how the institution was adapting to the needs of the community.

In 1580, the Monte Pio took on the role of collection agency for the Ufficio dell’Abbondanza, solidifying its position as a public bank.

In the 19th and 20th centuries, the Monte dei Paschi bank underwent significant changes. The bank was reorganised in 1833, leading to the establishment of a savings bank.

After Napoleon's fall and the restoration of the Lorraine dynasty, the Monte had to adapt to the new circumstances. The Commune was charged with the bank's superintendence, direction, and protection, as stated in the 1872 charter.

The new charter also led to the development of farm loans, which were assumed by the savings bank in 1870. This resulted in the issuance of Agricultural Bonds, used by the public as a real currency for many years.

By the end of the century, Monte dei Paschi had managed to avoid the banking scandals that affected other institutions. In 1910, it was the second-largest savings bank in Italy, with branches in several cities.

The bank's expansion continued, and in 1936, it was recognised as a publicly controlled corporation. This change partially cancelled the City of Siena's prerogative to name all the bank's administrators.

The bank's transformation into a corporation called Banca Monte dei Paschi di Siena occurred in 1995, following a decree by the Minister of the Treasury. Since June 1999, the bank's shares have been traded on the Italian Stock Exchange.

In 2017, the Italian State became the bank's majority shareholder after a capital increase of Euro 8.3 billion.

The 1990s were a significant period for the Monte dei Paschi di Siena, as it became the fourth-largest bank in Italy in terms of deposits.

In the early 1990s, the bank diversified its activities into bancassicurazione, creating Monte dei Paschi Vita, and began operating in the funds management sector through Ducato Gestioni.

The bank's expansion continued with the acquisition of control over Mediocredito Toscano and INCA in 1990, which would later merge into MPS Banca per l'Impresa and MPS Capital Services.

The bank also acquired significant stakes in foreign banks in Belgium, Switzerland, and France.

A major milestone was reached in 1995 with the creation of the Banca Monte dei Paschi di Siena S.p.A. and the Fondazione Monte dei Paschi di Siena, a non-profit entity focused on social and charitable activities.

The Banca Monte dei Paschi di Siena was listed on the Milan Stock Exchange in 1999, with an initial public offering that was ten times oversubscribed.

In the early 2000s, Banca Monte dei Paschi di Siena made a bold move by acquiring Banca Antonveneta for a significant amount, which ultimately led to the bank's financial troubles.

The acquisition deal was completed in 2007, but it wasn't until 2013 that the public prosecutor in Siena concluded the investigation into the deal, issuing 11 arrest warrants, including one for the bank's former president, Giuseppe Mussari, and one for its former director general, Antonio Vigni.

The investigation found that the bank's management had manipulated markets and hindered regulatory oversight, leading to a series of financial losses. The bank's involvement in the derivatives market, specifically the Alexandria and Santorini contracts, was also under scrutiny.

These derivatives were used to conceal losses from the Antonveneta acquisition, and were not disclosed to the bank's internal controllers or regulatory authorities. It wasn't until 2012, when new management took over, that these operations were discovered.

Bank of Italy imposed a 5 million euro fine on the former leaders of Monte dei Paschi in April 2013.

This fine was a result of a scandal involving the bank, which was a significant blow to its reputation.

The scandal, known as "Scandalo MPS", led to a loss of trust in the bank's management and governance.

In 2013, Bankitalia took action to address the issue, but the damage had already been done.

The fine was a clear indication that the bank's actions had consequences, and that those responsible would be held accountable.

The bank's reputation was already on shaky ground, and this fine only added to the problems.

The former leaders of Monte dei Paschi were directly responsible for the bank's troubles, and the fine was a necessary step to restore order.

The bank's cultural and economic development efforts have faced significant challenges in recent years. It's a shame, as the bank's art collection and historical documents are truly priceless.

The bank was once a major supporter of the Palio di Siena and historic building renovations, financing these projects with an average of $150 million per year from 1996 to 2010. However, this funding has largely dried up since 2010.

The bank's sponsorship of Mens Sana Basket of Siena is still going strong, but its other community investments have been severely impacted. The bank's funding for the Siena–Ampugnano Airport expansion was also ultimately unsuccessful.

The recovery period from 2014 to 2022 was a slow and challenging one.

Global economic growth remained sluggish, averaging just 3.2% per year during this period.

Many countries struggled to recover from the financial crisis of 2008, with debt levels remaining high.

In 2014, global trade growth declined by 0.5%, a stark contrast to the 2.5% growth seen in 2013.

The slow recovery was also marked by stagnant wages, with average annual wage growth of just 1.6% in many developed economies.

The International Monetary Fund (IMF) estimated that it would take over a decade for the global economy to return to pre-crisis levels of output.

The recovery was hindered by ongoing conflicts in the Middle East and North Africa, which disrupted global trade and investment.

The MPS bank has a rich history, and its cultural and economic development have been significant contributors to the region. The bank's headquarters in Palazzo Salimbeni in Siena hosts an impressive art collection and historical documents, but they're not usually open to the public.

One notable acquisition is a gold-plated panel by Segna di Bonaventura, which cost the bank nearly one million Euro. This acquisition is just one example of the bank's commitment to preserving and promoting local art and culture.

The MPS bank has also been a primary sponsor of the Italian basketball club Mens Sana Basket of Siena, which is currently in Lega A and participates in the Euroleague. This partnership has helped promote the team and the region on an international level.

However, the bank's expansion plans, such as the development of Siena–Ampugnano Airport, were met with opposition from local and international groups due to concerns about environmental damage and the impact on tourism. The project was eventually liquidated.

Prior to the euro-crisis, the bank's profits funded various initiatives, including the Palio di Siena, historic building renovations, and biotech programs aimed at turning the Tuscan plain into a research hub. These projects received an average of $150 million per year from 1996 to 2010.

Unfortunately, the bank's financial struggles have had a significant impact on the banking foundation, which has seen a sharp decrease in revenue from the bank. This has affected the foundation's ability to provide endowments to other organizations, with a drop from €340 million to €62.5 million in 2009.

Banca Monte dei Paschi di Siena's shareholders have undergone significant changes over the years. The bank's largest shareholder is currently the Italian government, which holds a stake of 26.7% as of March 2024. This is a decrease from 39.2% in March 2024 and 68.2% in December 2017.

The Italian government's stake in the bank decreased in November 2023, when it sold a 25% stake, bringing its ownership below 50%. This sale reduced the government's stake from 64.23% to 39.23%.

The bank's second-largest shareholder is Generali Group, with a stake of 4.319%. The bank also holds a significant portion of its own shares, with a stake of 3.181%. Other notable shareholders include Gruppo Francesco Gaetano Caltagirone, Banco BPM S.p.A., and Anima Holding.

Here is a breakdown of the bank's largest shareholders as of 31 December 2017:

The bank's ownership structure has undergone significant changes since 2012, when the Fondazione Monte dei Paschi held a majority stake. However, the foundation has since diluted its stake, and the Italian government has become the bank's largest shareholder.

The Monte Dei Paschi Foundation was a significant player in the bank's ownership structure.

Its share of ownership dropped from over 55% in 2009 to below the CONSOB requirement to disclose in 2015.

The Foundation was established with a 1936 statute that appointed 16 members from local authorities, including 8 from the Municipality of Siena and 5 from the Province of Siena.

One member was appointed by the University of Siena, one by the Tuscany Region, and the last by the Archdiocese of Siena-Colle di Val d'Elsa-Montalcino.

The Foundation's influence on the bank's governance and operations has been highly influenced by Italian politics since the 20th century.

Research is needed to clarify the degree of this relationship, which involved some exponents of the governing body connected to Italian Freemasonry.

Banca Monte dei Paschi di Siena faced a significant financial crisis from 2008 to 2012, losing over $2 billion in the first half of 2012.

The bank had to recapitalize and faced restructuring or worse due to rising yields and declining valuations on Italian government debt. The majority owner, Fondazione Monte dei Paschi di Siena, initially resisted issuing new capital, which would have diluted its holding.

Here's a summary of the bank's financial data for the past few years:

The bank's financial performance has been inconsistent, with a significant loss in 2020.

The financial data of a company can be a telling indicator of its overall health and stability. In 2022, the company's net operating income was 3.088 million euros.

Looking at the numbers, it's clear that the company had a significant loss in 2022, with a net loss of 205 million euros. This is a stark contrast to the company's profit of 310 million euros in 2021.

One thing that stands out is the company's total assets, which have remained relatively stable over the past few years, ranging from 132 to 138 billion euros. However, the company's net worth has actually decreased, from 9.8 billion euros in 2020 to an unknown amount in 2022.

Here's a breakdown of the company's financial data over the past few years:

It's worth noting that the company's financial data in 2020 was particularly concerning, with a net loss of 1.7 billion euros and a net worth of only 9.8 billion euros.

Tax crimes were a major issue during the management of Monte dei Paschi from 2005 to 2008, with 11 people including former top executives and managers implicated.

The investigation into these tax crimes is an example of the importance of financial transparency and accountability.

Between 2005 and 2008, 11 people were implicated in tax crimes related to the management of Monte dei Paschi.

Banca Monte dei Paschi di Siena has a large network of branches, with over 1500 filiali and 200 centri specialistici.

Their customer service is highly rated, with many clients praising the helpful and knowledgeable staff, who are always willing to provide advice on investments, even for smaller amounts.

The bank's client base is also impressive, with a staggering 85% of clients being satisfied with their services.

MPS Bank has a large network of branches, with over 1500 filiali and 200 centri specialistici.

The bank's extensive branch network is a testament to its commitment to serving its clients. The client's experience in a small filiale in Toscana was overwhelmingly positive.

The client praised the friendly and helpful staff, who were always available to provide advice on investments, even the smallest ones. The bank's staff was described as "molto gentili" (very kind) and "sempre disponibili" (always available).

As a long-time customer, you can expect a certain level of service, but it's not always the case.

Some customers have been with Montepaschi for over 20 years, like the one who's been a customer for more than two decades and has a multifunctional credit card.

They've experienced a change in service quality over time, with one customer noting that something has changed and they're considering switching banks due to higher fees.

The fees can be significant, with one customer paying a 4% commission on cash withdrawals, which they consider a "scorrettezza" or unfair practice.

The customer service at some branches can be lacking, with one customer having a disappointing experience at a Milan branch, where the director seemed uninterested in helping.

On the other hand, some customers have had positive experiences with their local branches, like the one in Tuscany, where the staff is friendly and helpful.

The bank's online services can also be a letdown, with one customer experiencing errors when trying to make a transfer, and another criticizing the bank's outdated technology and poor programming skills.