The Restructuring of Monte Dei Paschi di Siena. A Controversial Case in the EU Bank Resolution Regime

Abstract

The new regulatory tools introduced in the EU banking recovery and resolution regime that aim to reduce the intervention of supervisory authorities constitute a challenge for legislators and market actors. This article examines the controversial aspects of Monte dei Paschi di Siena (MPS) rescue plans, taking into consideration the adopted restructuring options. Although MPS is not global systemically important its collapse determined a serious impact in the EU banking sector. This article argues that to benefit from financial aid MPS had to be bailed-in, measure that policymakers and regulators are not always ready to implement. MPS represented a real concern to the Italian Central Bank and the European Central Bank, and it demonstrated that banks rely on government bailout, something that it is difficult to change in the regulatory approach to failing credit institutions.