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JPMorgan Chase planned to buy Italy’s BMPS: sources

JPMorgan Chase wanted to buy troubled Italian rival BMPS but abandoned the plan over fears it would be vetoed by US regulators and opposed in Italy, people close to the deal told AFP on Wednesday.

JPMorgan Chase planned to buy Italy's BMPS: sources
BMPS was valued at a little more than $800 million on the market Wednesday

Jamie Dimon, chief executive of the largest US bank by assets, and Daniel Pinto, the London-based head of JPMorgan's investment and finance department, are behind the plan to bail out the Banca Monte Paschi di Siena unveiled on Friday, according to the sources, who asked to remain anonymous.

Their first idea, the sources said, was the outright purchase of the heavily indebted BMPS, which the European Central Bank last week cited as the financial institution most susceptible to bankruptcy according to EU bank stress tests.

Contacted by AFP, JPMorgan declined to comment.

JPMorgan has deep pockets – last year the firm had $24.44 billion net profit. In contrast, BMPS is in a stock plunge: The Italian bank was valued at a little more than $800 million on the market Wednesday.

The problem is that the current environment is hostile to megabanks, one of the sources indicated, adding that JPMorgan hesitated to pursue a bid fearing US authorities would take an unfavourable view of a US bank rescuing a European firm.

US regulators want to force large financial institutions considered a potential systemic threat to the financial system to reduce their size. In the aftermath of the 2008 financial crisis, they have imposed significant increases in capital requirements of banks deemed “too big to fail” and tightened their oversight.

JPMorgan also feared a backlash to the acquisition in Italy and in Europe where big banks are not favourably viewed in the press, the other source explained.

The US bank now believes the best solution would be an injection of funds, the support of the government and improved governance, the two sources stated.

According to its calculations, €5-€6 billion ($5.6-$6.7 billion) would be sufficient to stabilize BMPS.

Dimon discussed this with Italian Prime Minister Matteo Renzi while he was in Italy in early July for the 100th anniversary of JPMorgan's presence in the country, the sources said. He also discussed it with the BMPS management team.

JPMorgan's rescue plan for BMPS is twofold.

The first part entails the resolution of bad debts estimated at €27.7 billion at the end of March, which would be put in a specific financial instrument.

The second part is a capital injection of €5 billion, to which Goldman Sachs and Citigroup have already agreed, according to one source.

Banco Santander, Credit Suisse, Deutsche Bank and Bank of America Merrill Lynch also were expected to participate, according to the Financial Times.

The rescue is aimed at restoring confidence in and stabilizing BMPS through the end of the year, preparing it for a merger with a stronger banking group, the other source close to the situation explained to AFP.

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HORSES

IN PICTURES: The Siena Palio, Italy’s historic horse race

The Palio di Siena is a twice-annual festival that sees the Tuscan city's various districts compete in a bareback horse race.

IN PICTURES: The Siena Palio, Italy's historic horse race
The Palio di Siena, one of Italy's oldest horse races. Photo: Giuseppe Cacace/AFP

Dating back centuries, it's one of Siena's most important traditions and thousands of locals and tourists gather in the central piazza to watch it unfold.


Photo: Vincenzo Pinto/AFP

The first of this year's races – known as the Palio of Provenzano in honour of the Madonna of Provenzano, an icon kept in a local church – takes place on the evening of July 2nd.

There's a second on August 16th, as well as a series of trial runs in the days leading up to each race.


Children cheer their local district. Photo: Nico Casamassima/AFP

For the Siennese, the contest is a chance to celebrate local pride and honour the city's long history. 

But the event isn't without its controversy, and city authorities have passed regulations aimed at ensuring the animals' wellbeing after campaigners criticized the fact several horses have died in the race over the years.


A collision in July 2016. Photo: Giuseppe Cacace/AFP

The successor to earlier races run on different courses or on buffalo and donkeys, the Palio as we know it today first took place in 1633. Many of the traditions established in its earliest years still remain in place.

The day begins with a final trial, known as the 'provaccia', that takes place on the morning of the race. 

Horses and riders then receive a blessing from their local priest, who concludes with the traditional commendation: “Go, and return victorious!”


Blessing a horse and its rider. Photo: Claudio Giovannini/AFP

The afternoon sees a costumed parade through the city centre, with participants carrying flags showing the symbol of their district or 'contrada'.

Each one is named for an animal or symbol and has its own colours, as well its historic allies and rivals among the other contrade.

Photo: Giuseppe Cacace/AFP

Only ten of the city's 17 districts take part, according to a limit imposed in the 18th century to reduce the number of accidents. The seven which didn't participate the previous year automatically get a spot, with the remaining three chosen by drawing lots.

There is huge rivalry between the districts, and the district that goes the longest time without a victory gets the moniker 'nonna' (grandma).

 

A post shared by Matteo Cainer (@macainer) on Jul 2, 2017 at 11:43pm PDT

The parade, or Corteo Storico, includes around 600 people dressed in medieval costume, from musicians to flag-bearers known as 'alfieri'.

The procession leads spectators to the impressive Piazza del Campo where the race takes place. 


Arriving in Piazza del Campo. Photo: Giuseppe Cacace/AFP

After a signal is sounded around 7:30 pm, nine of the ten horses line up behind a rope and wait for the final horse, selected at random and called the rincorsa, to gallop into the starting area – the cue for a starter to pull the rope away and begin the race.


The horses prepare to start. Photo: Giuseppe Cacace/AFP

The competitors must run three laps around the sloping medieval square, which is covered with earth and protected with crash barriers for the occasion.

The winner is the first horse to cross the finish line – with or without its rider, who may well fall off.

Photos: Claudio Giovannini, Giuseppe Cacace/AFP

The jockeys each carry a long whip, which they are allowed to use not only to encourage their own horse, but also to distract or jostle other riders and their horses.

After all the anticipation the race is over very quickly, rarely lasting longer than a minute and a half.

Immediately afterwards comes the awarding of the prize that gives the race its name: a palio, or banner, usually decorated by a local artist.

The victory is a huge source of pride for the winning contrada.

The Onda district celebrates its victory in the August 2017 Palio. Photo: Filippo Monteforte/AFP

The celebrations conclude with a hymn of thanksgiving at the nearby church of Santa Maria in Provenzano.

There are further festivities in the autumn, when the winning contrada hosts a victory dinner at which its champion horse is the guest of honour.


The Pantera district won the Palio with its horse Choci in July 2006. Photo: Roberto Carli/AFP

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