Banca Monte dei Paschi di Siena: Tier 1 up to 8.8% for removal of prudential filter on goodwill

The removal, decided upon by the Bank of Italy, has a 40 bps impact on common equity.

Banca Monte dei Paschi di Siena's Tier 1 is up by 40 basis points, coming to 8.8%, on the back of removal of the prudential filter on The Bank of Italy has today communicated that, further to the introduction of what is known as the "Thousand Extensions" (Milleproroghe) decree, no reasons exist for maintaining the negative prudential filter for consolidated and individual regulatory capital which was applied to the net capital gain recognised through profit and loss in relation with aligning tax and accountancy treatment of goodwill in 2008.

The effect on the Montepaschi Group's capital ratios, which shall be included in supervisory reporting as of 31 March 2011, is quantifiable in an increase of Tier 1 and Total Capital ratios by approximately 40 bps. If reflected in reporting as at 31 December 2010, this effect would have led the Group's capital ratios to stand respectively at 8.8% (Tier 1 Ratio) and 13.4% (Total Capital Ratio). The capital ratio increase arising from prudential filter removal confirms capital is of the highest quality, also in view of the new Basel III prudential framework. In light of the communiqué by the Bank of Italy, the Milleproroghe decree is reasonably expected to reduce Basel III impact in relation with certain tax components that generate deferred tax assets.