Banca Monte dei Paschi di Siena SpA M&A Call (English, Italian) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Giovanni Razzoli - Deutsche Bank - Analyst : Good morning and four questions on my side. In the above 16% CET1 ratio that you are mentioning, you are assuming a payout ratio of up to 100%. Can you please clarify what is the expected payout more or less from '26, '27 and '28 for the combined entity? You are running at 75% in your bank, above that. Can we already assume 100% from year one? Second question the release of the DTA, the EUR500 million of release on the DTA. Is it my understanding correct that this release will take place regardless of the synergies as basically you will be leveraging on the profitability of Mediobanca? And another very two questions, the closing of the deal seems to be quite fast. I assume there is no need to get the DG comp or European commission green light given your state -- still 11% state ownership. And the last question, I think I understand correctly given your warning that the 12% general stake of your Mediobanca will be kept as a crucial and critical part of the combined in your plan. Is it my understanding correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 8:00AM, BMPS.MI - Banca Monte dei Paschi di Siena SpA M&A Call (English, Italian)

Question: Domenico Santoro - HSBC - Analyst : Thanks for the presentation. I do have also a few questions. First of all, again, on the release of the DTA, I just want to try to understand correctly what you say here. The EUR500 million are based on top of those that you are already inclined in the business plan. So I just -- the one basically to make a mistake in terms of double counting. In other words, shall we take the Monte Paschi number in your business plan, the Mediobanca number synergies. And on top of that also include the EUR500 million that you mentioned for six year, that I think is crucial. The other question is about the EPS accretion that you mentioned in your press release. What this includes, of course, the release of the DTA, what would be the EPS accretion dilution without the DTA? And the other question is more about the Mediobanca franchise. Medibank has a great history in terms of corporate franchise in the name. So my understanding is that you will merge the entities, but what are the measures that you will take in order to preserve the DNA of Mediobanca and the corporate franchise in the investment banking? I know that Mediobanca now is more diversified compared to the past, but it's still the main source.

Question: Fabrizio Bernardi - Intermonte - Analyst : I have a couple of questions. The first one is regarding funding costs of synergies, that are to me a little bit, let's say, not strange, but I just want to understand that the DNA of the synergies, given that you have a common equity tier 1 ratio that is by far higher than the one of Mediobanca. So in perspective terms, you should be able to get a saving in terms of the cost going forward. The second question is if you can give us a comparison between the usage of DTA standalone and the usage of DTA with the Mediobanca. You are talking about an acceleration in the use of DTA, but you are also saying that you are, let's say, giving to the Mediobanca shareholders a chunk part of the DTA. Then, another question that is a little bit more, probably let's call it political because you are launching a tender offer of Mediobanca at its size, which is counterintuitive in this moment with, let's say the situation of interest rates is becoming more challenging for all the banks and you had a change very, very strong in the shareholder base very recently. So I was wondering if you can put this in a certain context. Another one, just wondering, I may let's say assume that there could be revenue synergies between two banks that are completely different and you can use Mediobanca in order to do business inside the (inaudible) and that in the end is a retail commercial bank. But I was wondering where the cost synergies are coming from because they are a little bit more difficult to include in this kind of deal?

Question: Andrea Lisi - Equita - Analyst : The first one is again on synergies. In particular, how many years do you think our next rate arrive at the rate of one of synergies? And the second one is the fact that this is a deal that is really ambitious and that aims at matching together a commercial bank with a corporate investment bank and obviously integration are noteasy in this way. So if you can provide us more color on which steps, how do you think to perform the integration? And if you don't think that, at some point, the risk of maybe some attrition in terms of revenues and the risk of matching the two different corporate cultures, maybe not having the possibility to retain all the talent that they both of the companies have. So if you can argument on this. Then the second question is on, if you think that -- obviously (inaudible) activate the facility on the Mediobanca, and so there is obviously limitation what Mediobanca can do from this to going on. And the other is on the condition of the 66.7% level at which you want to reach at least in Mediobanca for the offer to bring on if this condition is [possible]. And if you can already anticipate which level you -- in case of the tender is lower to the threshold you can accept. And the last one is the CET1 level. So we will end up with a player that has still a CET1 level that is quite high 16%. And so if you can tell us which could be a target level of CET1 for a play with like this. And what do you think to do with the excess capital?

Question: Hugo Cruz - KBW - Analyst : First of all, I would like to understand the rationale for the deal structure more and the current offer implies that Mediobanca shareholders will end up with 60% of the combined entity. So current Mediobanca shareholders will have control of the combined entity. You are bringing more excess capital to the deal, then Mediobanca, you are bringing DTAs to the deal. So you are offering a premium for Mediobanca. You end up with no control and arguably you're not being paid for your excess capital. So I would like to understand first, why are you offering a premium and not the other way around? And second, the way you're pitching the deal, it's very much a complementary deal. No aggressive integration. So why is this not a merger of equals where the two banks agreed the deal upfront and presenting it together to the market? And why is it you presenting the deal and not friendly combination? Second question is around the DTAs, you've talked about EUR1.2 billion of NPV for the Mediobanca shareholders. What is the NPV of the DTAs for the Monte Paschi shareholders on a standalone basis? Because on my calculations, perhaps I'm wrong, but I actually think for Monte Paschi shareholders, the NPV of the DTAs is bigger on a standalone basis and on a combined basis because they have 100% of the DTAs even though it takes longer to recover them. And third question, you're making this offer, I think buying up to 10% stake on Mediobanca actually financially could be very attractive. So are you going to try to buy in Mediobanca before getting the EGM approval or not? And fourth question, what happens if your EGM does not approve the deal. So, what you do then? That's it.

Question: Hugo Cruz - KBW - Analyst : So I tried to it's sorry, it's clear, I think you are making a the correct analysis and we were also thinking about that. But we want to make a an attractive offer because we believe that getting control me bank is crucial for the future of our bank and for getting a strong presence and capability to compete on the Italian market in an environment where interest rate is going down, inflation is going down. But anyway, we need a lot of money to make investment in digital transformation. So sometimes you have to think a little bit in a way of looking forward and not necessarily in a short way and thinking what immediately you can see is convenient or not convenient. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 8:00AM, BMPS.MI - Banca Monte dei Paschi di Siena SpA M&A Call (English, Italian) Clearly, I'm -- we are presenting today the dealer and this idea of this project. As I was mentioning, I think the way we are presenting, I believe that is a friendly way. It's just to offer the opportunity to join the efforts and to become a leading player having in mind that I was mentioning already before we don't intend to be. And I believe personally, I don't have even skills to be a [CEO] of investment banking business. So that's why we will absolutely keep a leading position for the investment bank from this powerful brand. Then clearly, once that we are together, we can think how to better define the focus on what is the investment banking and what are typical retail and commercial banking activities. This is the logical, industrial, logical behind. So I hope that we will find a way to work together and to develop even beyond what are our estimation, the growing synergies and capability to be even stronger on the market of this combined entity. Now, we will look at the market, it's clear that if there will be an opportunity to buy shares in the frame of the current regulation for OPS, we can analyze it, we don't exclude it. Then it's clear that you can make easily the calculation about the [TA]. Then the calculation is even more complicated because you should consider how much of the DTAS are included already are considered in our market cap. So, but overall, what I think is a fact is the acceleration of caching of the DTAS also for the shareholders of [MS]. About general meeting, it's clear that we are managers, we are entrepreneurs, we take consideration of everything we are doing. I'm confident that if I go to I will present an industrial project that is innovative, is building up a new champion diversify revenue, 16% capital, 100% payout ratio, very efficient organization with two powerful brands in Italy. And maybe we can also look at Europe. I don't think that might show -- will not be in favor of the deal.

Question: Luis Pratas - Autonomous Research - Analyst : This is Lu from Autonomous. Thank you for taking my questions. I have a couple please. First of all, on a more strategic, could you please comment on the strategic logic of this proposed transaction with [media] banker which is a specialist bank without a large branch network, compared, let's say a more obvious combination with the universal bank like BPER where cost synergies are way easier and simpler to execute. Can you also provide your confidence levels on the revenue synergy assumption? And then regarding your payout distributions this year, does this potential transaction change the expected payout for 2024? And finally, on the generalist take, could you elaborate how you treated the generalist taking in the pro forma cap breach? Basically the impact split in the number and the nominator. Thank you.

Question: Andrea Lisi - Equita - Analyst : Yes, we are assuming conservatively to treat the general state according to the significant participation treatment. But as mentioned in the presentation, there might be upside in this respect anyway, based on this assumption, so the current conservative assumption, the in terms of capital, the impact is around EUR3 billion in terms of RWAS compared to the current media bank treatment, we would have a saving of around EUR4.5 billion.

Question: Andrea Lisi - Equita - Analyst : Thank you very much.

Question: Ignacio Ulargui - BNP Paribas - Analyst : Hi. Good morning. Thanks for the presentation. I have a couple of questions if I may. I mean the first one is if you have got any visibility or any indication for any media bank as a holders on the proposed transaction. Second one, it's whether the state stake in Monte Pasi has any kind of implication or that generate an implication going forward would restrict in any case, the move of the bank on this deal. And the final one is whether within the revenue expectations that you have revenue synergies expectations that you have, if you have incorporated any initial revenue loss from any potential distraction, any potential talent that leaves me bank up or it's always accurate on the combination of both of both institutions. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 8:00AM, BMPS.MI - Banca Monte dei Paschi di Siena SpA M&A Call (English, Italian)

Question: Ignacio Ulargui - BNP Paribas - Analyst : If the stake that the government has in Monte Paschi has any, I mean, generates any kind of restriction going forward on the deal or there is no restriction from the government?

Question: Manuela Meroni - Sanpaolo - Analyst : Good morning. Thank you for taking my questions. The first one is on the insurance business. I'm wondering if this move can change your strategy in the insurance business. So I'm clearly referring to your joint venture with Axa. Can you, -- we expect now excel to be replaced by generally, or the possibility to internalize the joint venture remain one option or the main option for you in order to increase the non-NII component of revenues. The second question is on the Danish compromise. I'm wondering if you are planning to ask for the use of the Danish compromise and if you are currently eligible for that, a third question the phasing on synergies, you said that to expect synergies in three years. Could you please split the in the three years in terms of how many synergies in terms of cost revenues and funding you expect for each of the next three years? And finally, just a clarification, you do not intend to merge multipay with the Mediobanca. Did I understood it correctly? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 24, 2025 / 8:00AM, BMPS.MI - Banca Monte dei Paschi di Siena SpA M&A Call (English, Italian)