The pastures of Siena. Paradoxes and mysteries of a bank

Il Monte is Siena and must not be broken up; no to the ‘historic compromise’ in banking terms: ‘white’ finance and ‘red’ finance, with Giovanni Bazoli and Giuseppe Guzzetti’s Intesa Sanpaolo alongside Unipol, which cannot shake off the influence of the Lega co-operative. A surge of autonomist sentiment unites Eugenio Giani from Empoli, the PD president of the Tuscany region, and the Lega’s Matteo Salvini, the PD’s economic spokesperson, Antonio Misiani, and the Minister for the Treasury, Giancarlo Giorgetti, who is also a shareholder with a small stake that, at this stage, he can no longer let go of. Right and left are united in this battle for independence. But if Monte dei Paschi is Siena, as they say, what are we to make of Mediobanca, which is Milan, and Generali, which is Trieste – or rather, Central Europe? How much hypocritical propaganda lies in this ‘municipalism’ that unites the entire constitutional spectrum and perhaps even beyond? With a truly curious twist: when Siena was governed by the Left, the Right railed against MPS; it even set up a parliamentary committee chaired by Gianluca Vinci, a Calabrian MP from Fratelli d’Italia, to ‘shed light’ on the mysterious death of David Rossi, former head of external – and perhaps even internal – relations at Montepaschi. Now that Siena is under right-wing rule, the left is calling on the Meloni government to intervene to stop Intesa and Unipol. Reformism or self-sabotage?

Paradoxes and mysteries have always accompanied the centuries-long history of a bank characterised by exceptions and anomalies, presenting itself at times as an economic entity focused solely on accounts and profits, and at others as a political institution, depending on the circumstances and expediency, whilst allowing many – indeed, too many – to ‘graze’ on Monte dei Paschi (meaning ‘pastures’ in the local dialect). In the resolution of the Council of the Republic, dated 27 February in the year of our Lord 1472, it was registered as Monte Pio, that is, a charitable institution, with the aim of ‘ensuring that poor, wretched or needy people are aided and supported in their needs and necessities’. With the Grand Duchy of Tuscany came the ‘pastures’ that stretched as far as the Maremma. In 1580, it became a public bank because by then everyone in Siena and the surrounding area was in need of it. The city, a proud rival of Florence, has not always been the allegory of good government as depicted in Ambrogio Lorenzetti’s fresco housed in the Palazzo Pubblico.

In 1860, after centuries of marginalisation, Siena had fallen into decline and the province had been impoverished. In his novel "Tre Croci", the Sienese writer Federigo Tozzi depicts a city steeped in bitterness and tells a harrowing story inspired by real events in which Montepaschi also plays a part. It is the early 20th century. Three brothers – Niccolò, Giulio and Enrico – in an attempt to settle the debts of an antiquarian bookshop left to them by their father, ask for a loan from Cavalier Orazio Nicchioli, a town councillor who has acted as guarantor for a promissory note. This proves insufficient, so the three issue further promissory notes bearing Nicchioli’s signature; however, an official from Montepaschi informs the councillor, and Giulio, overwhelmed by the scandal, hangs himself in his shop. That, however, is not the end of it: Niccolò dies of a stroke, while Enrico, driven from his home, becomes a beggar and wastes away in a hospice. Two nieces remain, Lola and Chiarina, who, together with Modesta, Niccolò’s wife, purchase three identical crosses for the graves of the three brothers. “When Chiarina and Lola lingered there, waiting for their aunt, the sky was entirely ashen, yet clear; and the sun made the mist, where it lingered, dazzling. The countryside, beneath Mount Amiata, grew ever more faded and monotonous. The outlines of the hills softened, almost disappearing. Even the cypress trees were veiled; though less so than those nearby. The walls of the enclosure sink into the yellow earth, amongst the grass of the large rocky patches…’. Tozzi’s Siena is no longer that of Lorenzetti, nor is it yet that of Montepaschi. In the meantime, the pastures have dried up; only MPS remains to prevent them from disappearing.

In the era of political coalition, the mayor was a socialist, the provincial president a communist, the bank was run by the Christian Democrats, and the foundation – virtually the sole shareholder – was shared amongst all parties, including the Curia and the University, which had their own representatives on the board. Back then, Monte was Siena and Siena was Monte. The underlying philosophy was simple: Monte was a collective asset, and it was the community that must guide it. The community meant the political parties, local administrators and leading figures, with politics taking precedence. From the Palio to the basketball team and right up to Emilio Giannelli, a lawyer and cartoonist for the Corriere della Sera, anyone not involved with Monte dei Paschi was not considered a true Sienese. In both high society and the underworld, aprons and compasses were ubiquitous. On the desk of Tina Anselmi, chair of the Commission of Inquiry into the P2 Masonic lodge, a photocopy had arrived of a loan from Monte dei Paschi to Silvio Berlusconi, thanks to which – as Il Cavaliere has always gratefully recalled – the then Lombard ‘property developer’ built Milano 1 and Milano 2. One fine day, the lists of the ‘brothers’ who, from the Alps to Favignana, had entrusted their souls and destinies to secret Masonic lodges were also dumped on the table. Anselmi took them and filled a room in Palazzo San Macuto, the commission’s headquarters, with them. It was 1993, and the ‘Clean Hands’ operation was extending its reach even to that sort of Sienese ‘free republic’. Everything had to change, they said – as is always said.

The time seemed right in 1990 when Giuliano Amato, together with Guido Carli – who would later succeed him as Minister of the Treasury – launched the reform that gave a new structure to the ‘petrified forest’, as the ‘subtle doctor’ called the Italian banking system, which opened up to the market through a stock market listing. However, the Sienese foundation secured an exemption from the law, namely the right to hold more than a majority stake – 58 per cent – in Montepaschi. But the ‘market-oriented’ wave was strong enough at that time to bring the ‘homines novi’ to Siena as well. In 2005, a ‘banking war’ broke out, aimed at overhauling Montepaschi itself, which was at risk (even then) of falling into the hands of Unipol. ‘We’ve got a bank,’ Piero Fassino naively let slip whilst speaking on the phone with Giovanni Consorte, who headed the insurance company controlled by the Lega. In highly cross-party Siena, however, they had quite other things in mind. No ‘red’ banking hub: so BNL went to the French firm BNP Paribas, whilst Antonveneta passed from the Dutch firm ABN AMRO to the British Royal Bank of Scotland to the Spanish Banco Santander within the space of a year. And Montepaschi was left on its own. Is it always better to be in bad company than in none at all? Giuseppe Mussari, the Calabrian lawyer who took the helm of the foundation in 2001 and later moved to the bank’s boardroom, does not share this view. In 2007, the entire Italian financial landscape underwent a radical change. Banca Intesa (heir to Banco Ambrosiano, plus Cariplo and Commerciale) merged with Sanpaolo of Turin and, just for good measure, also swallowed up Banco di Napoli; in response, Unicredito took over Capitalia (the former Banca di Roma, which had merged with Banco di Santo Spirito). The old barriers between Rome, Milan and Turin came crashing down; the Roman banks’ ties to the Holy See were loosened, as were those of Lombard Catholicism and the secular Freemasonry of northern Italy. There is no doubt that, in all those cases too, politics was ‘keeping a watchful eye’, exerting its moral suasion and exerting influence. Romano Prodi was very close to Giovanni Bazoli, the head of Intesa, and it is said that it was precisely a telephone call from the head of government – who had just returned from Madrid – that warned Bazoli that Emilio Botín, the chairman of Banco Santander, a highly influential banker considered close to Opus Dei, had set things in motion to scupper Banca Intesa’s plans. At that time, however, politics—while active behind the scenes—left the bankers (who were, for the most part, friends) to their own devices under the watchful eye of the Bank of Italy, led by Mario Draghi.

And what of Montepaschi, a clay pot amongst bronze ones? The Sienese bank aims to compete with the major players; it seeks to become the third major player (even back then, this was a veritable obsession in Italian politics and the banking world), so it plans to take over Antonveneta, which is being treated like a rag. But it has neither enough capital nor enough liquid assets. To secure the capital, the bank’s top management devised a scheme involving derivative contracts that also included Deutsche Bank and Nomura, but the operation turned out to be a shambles; for liquidity, they relied on Antonveneta’s cash reserves, which had in the meantime been drained following its takeover by Santander. 2011 ended with a deficit of 4.69 billion euros. Mussari threw in the towel and ended up on trial alongside his key associates. A staggering 10 billion euros was at stake. It was a scandal of the first order, but it was merely the fuse that ignited the powder keg that had built up over time. Montepaschi’s accounts revealed 47 billion euros in unpaid loans, many of which were now irrecoverable and held in the names of high-profile clients as well as small borrowers brought to their knees by the crisis. Accusations of fraud, market manipulation, fraudulent bankruptcy and a host of other offences flew thick and fast. Mussari was sentenced in 2019 to seven years and six months’ imprisonment. In 2022, the Court of Appeal overturned the first-instance verdict: he and all the other defendants were acquitted.

What to do about Montepaschi? “Bailout, bailout” – it is a public good, a precious asset, and “laissez-faire” no longer has a place in Rome (assuming it ever set foot there in the first place). But who pays? Going into the details may be tedious, but it is essential so as not to forget how much has been spent on the Sienese bank. The 2017 financial statements bring a tragic decade to a close with cumulative losses of 23.5 billion euros. The first significant intervention by the state had taken place five years earlier with the ‘Monti bonds’, a subordinated loan of 3.9 billion euros; this instrument was only partially repaid, leaving residual losses for the Italian Treasury. In 2017, the ‘precautionary recapitalisation’ operation took place, involving a public commitment of €5.4 billion, equivalent to 68 per cent of the bank’s capital. Between 2021 and 2024, there were further indirect interventions linked to the management of non-performing exposures (NPEs) and the use of deferred tax assets (DTAs), with estimated benefits of around €3 billion: state guarantees, with the use of public guarantees to support bond issues and ensure the bank’s liquidity during crises of confidence, entailed implicit costs for the economic system; losses linked to the management of public capital. The value of the shares held by the state has depreciated, with estimated losses up to 2024 of around 2 billion due to the stock’s underperformance relative to the sector. It is also worth noting the private contributions, starting with those from shareholders who participated in the recapitalisations following 2012, often under conditions of significant capital dilution, with total losses exceeding 4 billion euros.

The state bailout sparks a back-and-forth with the European Commission. Brussels raises the red flag over state aid and demands that the Treasury sell its stake. Rome does not shy away from the issue in words, but is playing for time – at least a dozen years. Gentiloni nationalised the bank, and subsequent governments, as the bank was gradually turned round and the share price began to rise, started to sell off stakes; this served to raise cash, but also to demonstrate goodwill towards the EU. According to estimates, the bailout measures cost a total of 20 billion euros – more than the Alitalia rescue. This figure comprises 12 billion in public funds and 8 billion borne by private shareholders, representing an unprecedented effort. The nationalisation was supposed to be ‘temporary’ – a self-righteous label, essential to prevent the ECB and the EU from blocking the operation, which constituted state aid to a bank that did not meet the capital requirements to stand on its own two feet.

Fair enough, but Montepaschi rose from its own ashes and at that point the Treasury collected dividends. All true. However, rather than going to Siena, the shares ended up in Luxembourg (Delfin is the largest shareholder), Rome and Milan. The Treasury had to sell; otherwise, Brussels would have lost patience. Thus, in November 2024, the deal came about involving the wayward Del Vecchio heirs, Francesco Gaetano Caltagirone and Banco BPM – that is, the former Banca Popolare di Milano so dear to the Lega – a consortium blessed, if not favoured, by the government, according to the judicial inquiry which is still ongoing. A chain reaction was triggered, forming a triangle between Rome, Milan and Trieste (those really are green pastures), until the white-and-red compromise was reached. Intesa Sanpaolo entered the fray with a firepower of over one hundred billion euros – that is the extent of its stock market value. Montepaschi is capitalising on 35 billion euros and wants to acquire two banks – BPM and Banca Generali – each worth the same amount. Here we go again: the wolf may lose its fur, but not its nature? At this point, the banner of Siena is flying once more – it is black and white, not white and red (as in the Intesa-Unipol alliance, if one is to believe the banking compromise). The city wants its Monte, where everyone can graze in peace – right and left, the Brothers of Italy and the PD, the Northern League, the Five Star Movement (why not?), all in the same boat, not to mention the General. But this is the news of our times.