What to do with Banca Monte dei Paschi di Siena? The ECB rejected any extension to a recapitalisation deal - involving a debt-for-equity swap, a share sale and a bridge loan to finance the hiving off of soured loans with a face value of €28bn - and now crunch time is approaching. The negative outcome of the Italian referendum is being blamed for the failure of a private-sector recapitalisation plan. But is it really plausible that this event, a well known and understood risk, really caused the €5bn deal to fall apart? After all, financial markets largely brushed off the "no" vote, while political change in the Italian executive is hardly unusual. A new government will be formed in the coming days and weeks. This is far from Brexit and Trump territory. Meanwhile, it is mind-boggling that BMPS has become the monster it has. It isn't a bank that's globally systemically important, and yet its future holds the key to the entire Italian banking system - indeed to crisis resolution within the eurozone itself.
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