On the Monte dei Paschi di Siena affair and the future of culture in the city. Interview with Roberto Renò

The recent events involving Monte dei Paschi di Siena cannot fail to interest even those who love art or those who work in art, due to the fact that the bank, through its Foundation, used to subsidize a good part of the city’s cultural life: restorations, events, exhibitions, much of this was possible precisely thanks to Monte dei Paschi di Siena’s funding.

In recent days, a great deal has been written in the newspapers about the affairs of the MPS, and above all it has also been written very badly: we have witnessed clearly biased articles, untruthful reconstructions of the facts, demagogic speculations that have only created a lot of confusion, and articles full of unexplained technicalities that have contributed to making it even more difficult for non-specialists to fully understand the events.

In order to have as clear and impartial a summary of the affair as possible and to understand what the fate of Siena and its social and cultural life will be, we at Finestre sull’Arte interviewed Professor Roberto Renò, professor of financial mathematics at theUniversity of Siena. We really thank Professor Renò very much for his availability!

What are in brief the events that led to the Monte dei Paschi scandal and the resignation on January 22 of Giuseppe Mussari, former MPS Chairman, from the presidency of the ABI (Italian Banking Association)?
There are two scandals, and they are not brand new: the ongoing investigation into the acquisition of Banca Antonveneta and the alleged existence of a new derivative (Alexandria) that allegedly led to huge losses. Mussari resigned most likely because of the investigation, on which there are heavy suspicions of corruption against him. When the Alexandria case was also added, he may have assessed that the situation was no longer sustainable.

What, in summary and perhaps with some similarities, are derivatives?
Derivatives are financial instruments built to protect financial operations from market risks, and also used for speculation. They resemble liability insurance policies, except that the accident is a fluctuation in interest rates or stock indexes. Their use as instruments of speculation can be highly harmful (one can lose much more than the amount invested with serious repercussions on the entire economic system) and for this reason they are subject, at least in theory, to various controls both internal to banks and external (Bank of Italy, Consob, other supervisory institutions). Instead, they constitute the main activity of the financial arm of any bank to hedge risks, and are indispensable for that purpose.

Why did MPS buy Banca Antonveneta for a sum exceeding the bank’s real value?
First of all, I would like to clarify that while I too believe that MPS paid too high a price for the purchase of Antonveneta, no one can say with certainty what the fair value of the transaction was. Therefore, we are always talking about assumed value. There are two possible answers to your question about why: the first is the official one, namely that MPS wanted to extend its network of branches and credit in regions where it traditionally had little presence, and covered instead by Antonveneta. Instead, the second possibility is that of a corrupt operation contrived to enrich individuals or particular groups. This second possibility is being investigated by the judiciary.

Was there actually a role of politics in the MPS scandal and if so what was it?
As far as management is concerned, the answer is certainly yes: of politics, unions and society as a whole. When things go wrong one immediately looks for the scapegoat, but in the case of MPS the blame seems to me to be widely spread, in a capillary way I would say. On the episodes of corruption, however, it will be the judiciary that will clarify responsibilities.

Is the affair likely to take a toll on Italian citizens? Does it really make sense to say, as many politicians are doing, that “the state gave MPS the IMU money,” or is it just demagoguery?
I have heard this phrase myself, unfortunately several times. It is sesquipedal nonsense and those who say it are in bad faith, perhaps because they are on the campaign trail. Suffice it to say that the state cannot give anything to companies: state aid is prohibited by the European Community. The affair may still have a bearing on Italian citizens, though not a huge one. Roughly speaking, of the 4 billion loan from the Monti-bonds, a couple of them were used to repay the Tremonti-bonds to the state itself, and the rest is for the bank’s operations. If MPS fails to repay the interest and capital, it will in fact be nationalized.

Will there be repercussions on the Italian economy as a result of the affair?
Yes, but no more than those related to the economic crisis. Banks are in dire straits, not only in Italy but throughout Europe. After all, Europe has not given public money to the banks to the extent that the U.S. government has intervened, so the system is in a kind of stand-by in which recovery will hopefully come. So the shingles on MPS will have an impact that is not negligible, but not gigantic either: like a heavy storm on a ship already adrift in search of a berth.

What might be the future of Siena as a result of the affair, knowing that MPS was very active in the social and cultural life of the city, including through its Foundation?
Probably MPS and the Foundation will no longer be able to be moneyed supporters as in the past, but Siena is a wonderful city, rich and full of opportunities. I think it must prepare to start again on a somewhat less assured basis, and roll up its sleeves as it did in the postwar period. The foundations, human and territorial, are not lacking.

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