Axa seeks better deal with Monte dei Paschi after leading fundraising

Axa, the largest private backer of Monte dei Paschi di Siena’s rights issue last month, is in talks to secure more lucrative insurance commissions from the Italian bank.

Last month, the French insurer agreed to under-guarantee €200 million of the €900 million offered to private investors, providing a lifeline to MPS as it attempted to fill a capital shortfall with its seventh rights issue in 14 years.

Many investors had shunned the deal because of MPS’s dismal track record: a series of scandals, government bailouts and high-profile court cases. The Italian government, which rescued the bank in 2017 and still owns a 64% stake, contributed 1.6 billion euros of the overall capital increase of 2.5 billion euros.

Axawhich has lost about €1 billion on MPS equity investments over the past 15 years, has nonetheless accelerated.

According to sources close to the matter, Axa is negotiating with MPS a new deal around a joint venture in which the commercial network of the Italian bank distributes a range of life and damage insurance policies.

The negotiations should net Axa more lucrative commissions and potentially extend the deal beyond its current 2027 term, these people say. Under Italian financial regulations, a formal statement only needs to be issued once the terms of the agreement have been formally revised. It will “probably happen next year,” the people said.

Axa notified the Italian financial regulator, Consob, before the launch of the capital increase that it had activated its “related party operations committee”. According to Italian rules, the procedure must be activated when the parties involved in any form of negotiation are linked to each other by investment, participation or other economic interests.

Axa said: There has been no change in our relationship with MPS, no commitments, no amendments to our agreements.

The insurer declined to comment on the formal activation of the “related party transactions committee” and notification to the Italian financial regulator.

MPS and Consob declined to comment.

The capital raise has already raised concerns in Brussels over possible illegal state aid after a pool of banks backing the capital raise were offered unusually high fees in return for their support.

Under EU rules, the state can only participate if all investors – public and private – are subject to the same conditions.

Earlier this month, MPS said overall attendance was 96.3%, including the contribution from the Italian Treasury, and underwriters, which include Bank of America, Citigroup, Mediobanca and Credit Suisse, who received a commission of 125 million euros in exchange for their support. , will retain only 93 million euros.

Beyond taxpayers and Axa, other funders of the rights issue include MPS business partners such as payments provider Nexi and Italian asset manager Anima, junior bondholders , Italian banking foundations and some pension funds directly controlled by the Italian Treasury.

Over the summer, MPS and Anima began discussing an amendment to the terms of their existing business partnership. The Milan-based asset manager has publicly stated that it plans to contribute up to 300 million euros to the capital increase in exchange for an improvement in the economic conditions of their partnership. He ultimately only brought in 25 million euros after negotiations failed and Anima said he opted for a “purely financial investment”.

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