EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 17 December 2012 
on the creation of capital buffers for the Banca Monte dei Paschi di Siena 
(CON/2012/109) 
 
Introduction and legal basis 
On 6 December 2012, the European Central Bank (ECB) received a request  from the Italian Ministry of 
Economic Affairs and Finance (hereinafter ‘the Minist ry’) for an opinion on Article 8 of Decree Law No 
216 of 11 December 2012 (hereinafter the ‘draft am endment’), amending Decree-Law No 95 of 6 July 
2012 (hereinafter the ‘amended legislation’), on the creation of capital buffers for the Banca Monte dei 
Paschi di Siena (MPS) through the issuance by the MPS of hybrid instruments to be subscribed by the 
Ministry. 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent  of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft amendment relates to rules ap plicable to financial institutions insofar 
as they materially influence the stability of financial institutions and markets. In  accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft amendment
 
1.1 Decree-Law No 87 of 27 June 2012, on which the ECB adopted Opinion CON/2012/642, was 
adopted by the Italian Government in order to create a temporary capital buffer for the MPS in line with the Recommendation of the European Banki ng Authority on the creation and supervisory 
oversight of temporary capital buffers to restore market confidence
3. The provisions contained in 
that Decree-Law were later included in Decree-La w No 95 of 6 July 2012, which was converted 
into law by Law No 135 of 7 August 2012. The amended legislation established a form of 
government support by authorising the Ministry to subscribe certain hybrid instruments (new 
financial instruments, NFIs) to be issued by the MPS, up to an amount of EUR 3.9 billion, of which 
EUR 1.9 billion would replace an equal outstandi ng amount of hybrid instruments previously 
issued by the MPS and subscribed by the Ministry.  
                                                 
1  OJ L 189, 3.7.1998, p. 42.   
2 All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
3  EBA/REC/2011/1 of 8 December 2011, available on the Europ ean Banking Authority’s website  at www.eba.europa.eu. 
ECB-PUBLIC  
2 1.2 The draft amendment introduces several changes in the recapitalisation scheme currently in force 
for the MPS. In particular, the NFIs’ coupon is to be paid in cash up to the operating result from the 
MPS’s most recent financial statement, net of th e provisions for obligatory reserves. If the MPS is 
not able to pay the coupon or any part of it in cash , for that amount the MPS could either allocate to 
the Ministry an equivalent nominal amount of new ordinary shares, issued at market price, or newly issued additional NFIs. The draft amendment also extends the deadline for the activation of 
the scheme to 31 January 2013. 
 2. General observations 2.1 The Ministry informed the ECB on an informal basis about the content of its draft amendment, 
before submitting it to the Italian Parliament. Ho wever, the consultation request should have been 
submitted so as to allow both the Ministry and the Parliament to take into consideration the ECB’s 
opinion before taking a decision on the substance of the draft amendment, in accordance with 
Article 4 of Decision 98/415/EC. 
2.2 The ECB notes that, subsequent to the adopti on of Opinion CON/2012/64, the Italian Parliament 
introduced in the amended legislation a new provision changing the way remuneration is 
determined for the members of the Board of Direct ors and certain executives  to ensure that their 
remuneration is linked to the business performance of the bank, the risks to which the bank is 
exposed and the need to mainta in adequate capital levels. The ECB welcomes the ongoing work on 
remuneration policies and schemes for financial ins titutions receiving public support in accordance 
with the Commission recommendation
4.  
2.3 The ECB recommends specifying in more detail in  the implementing legislation the features of the 
NFIs, in particular as regards subordination, in terest payments on the coupon, conversion features 
and other terms and conditions of issue.  
2.4 In the ECB’s view, the option granted to the M PS to pay the NFIs’ coupon, by issuing new shares 
to the Ministry, should be preferred to that of issuing additional NFIs. This second option, 
especially if repeated over time due to the absence or  inadequacy of distributable profits, would add 
to the bank’s interest servicing burden on the NFIs in an already difficult operating environment. This could pose further challenges to the bank’s performance in the near term and impair its 
capacity to redeem the NFIs in a timely manner.  
 
                                                 
4  Commission Recommendation of 30 Apr il 2009 on remuneration policies in the fi nancial services sector (OJ L 120, 
15.5.2009, p. 22). See also ECB Opinions  CON/2010/63 and CON/2011/42, paragraph 6.3. 
ECB-PUBLIC  
3 This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 17 December 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI