Innovative Capital Instruments -spread increased
Banca Monte dei Paschi di Siena S.p.A. resolved today to increase the spread on preferred securities issued by Mps Capital Trust I for an amount of €350.000.000 (ISIN XS0121342827) and Antonveneta Capital Trust I for an amount of €80.000.000 (ISIN XS0122238115) (the “Preferred Securities”), opting not to call these instruments at their first call dates (respectively, 7 February 2011 and 21 March 2011).
The new 3-month EURIBOR spread will stand at 630 basis points and will be applicable to each issuance of the Preferred Securities as of their respective first call dates, thus replacing the spread which was contractually provided for. Further details are reported in the following table:
Issuer
Mps Capital Trust I
ISIN
XS0121342827
1st call date
07/02/11
Contractual coupon as of 1st call date
3m Euribor 390
Coupon with new spread
3m Euribor 630
Entitlement of coupon with new spread
07/02/11
1st interest payment for coupon with new spread
07/05/11
Issuer
Antonveneta Capital Trust I
ISIN
XS0122238115
1st call date
21/03/11
Contractual coupon as of 1st call date
3m Euribor 562,5
Coupon with new spread
3m Euribor 630
Entitlement of coupon with new spread
21/03/11
1st interest payment for coupon with new spread
21/06/11
The decision is reflective of the extraordinary circumstances attributable to the utmost uncertainty in the current legal and regulatory framework, which does not yet provide for clear guidance on new issues of capital instruments eligible as Tier 1. Based on the guidelines set out in the document “Basel III: A global regulatory framework for more resilient banks and banking systems” published by the Basel Committee on 16 December 2010, the issue of instruments at least equivalent in regulatory quality to Preferred Securities, will be conditioned upon definition -by the relevant European and Italian Authorities- of the qualifying conditions for hybrid capital instruments to be eligible for inclusion in the banks’ core capital.
In this connection it is noted that, pursuant to the Italian supervisory framework, redemption of Preferred Securities would be subject to their prior and full replacement with at least equivalent-quality instruments. For an accurate reflection of market expectations, however, the Bank has in the meantime resolved to increase the spread applicable to the Preferred Securities. The extent of the spread increase has been determined with a view to aligning the Preferred Securities’ maturity payments with the amount that would ensue from current market conditions applying to instruments similar in features to the Preferred Securities, on account, inter alia, of their residual maturity.
The spread increase will become effective upon prior adoption of all required resolutions by the issuers’ governing bodies and upon execution of all formalities provided for by contractual obligations as well as by the applicable rules and regulations in force. Even under the extraordinary circumstances underlying its decision not to call the Preferred Securities at their first call date, the Bank attests its willingness to take investors’ expectations into the highest account, consistently with its long-standing strategy of proximity and commitment to the market.
