French insurer Axa has sold almost all of its 8 per cent stake in Monte dei Paschi di Siena just three months after it helped salvage the Italian bank’s capital increase, saying it had no plans to become a strategic investor.
Shares in Monte dei Paschi were down close to 9 per cent in mid-morning trading. Axa, which turned a profit of at least €30mn on the sale, said it had not wanted to seek representation on the Italian group’s board or “influence the bank’s broader long-term strategy”.
Axa was the biggest private investor in the bank, after backing its right issue last autumn, and has an insurance partnership with MPS, which is still in place. Following the sale, none of the new investors is expected to hold a stake above 5 per cent of MPS, people close to the deal said.
The French insurer agreed to sub-underwrite up to €200mn of the €900mn shunned by other private investors, providing a lifeline to the ailing Italian lender as it tried to plug a capital shortfall through its seventh rights issue in 14 years.
The Italian government, which rescued the bank in 2017 and still holds a 64 per cent stake, contributed €1.6bn of the overall €2.5bn capital raise. Rome is expected to begin privatisation talks with other lenders this year.
Axa was under pressure to name a director on the board ahead of MPS’s shareholder meeting this spring, leading the group to sell now, and after a rise in MPS’s share price since November, a person familiar with the matter said.
One other person said the new nationalist government in Rome did not want a French group to share board seats with their own representatives as privatisation talks begin.
The Financial Times reported in November that Axa had begun talks to secure more lucrative insurance commissions from the Italian bank in exchange, just as it agreed to back the share sale.
Any improvement in the fees in exchange for partaking in the capital increase would have been in contravention of EU rules, under which all investors, public and private, must be offered identical conditions.
Axa denied the talks had taken place or that there had been any amendment to its agreements with MPS, while MPS declined to comment at the time.
According to bankers and analysts in Milan, Axa’s choice was coherent with its initial decision to back the capital raise which was ultimately aimed at “saving their long-term partner” and the timing of the sale ensured it could reap a substantial return on its investment.
Some analysts expect the French group to now have “freer hands” to secure improved fees from the MPS partnership. The current joint venture between the two runs until 2027.
Axa retains a 0.0007 per cent stake in MPS after the share sale.
