Siena's Financial Fiasco Downfall of a Tuscan Paradise
Monte dei Paschi di Siena, the world's oldest bank, took five centuries to accumulate its wealth -- and three years to gamble it away. Its fall from grace is a disaster for its home city of Siena, which relied on distributed profits from the bank. Now the picturesque Tuscan city is trying to come to terms with the new reality.
Valentina still has exactly 22 hours before her future comes to an end. She has to drop off papers at the Italian Football Federation by 6 p.m. tomorrow to register her club in Serie A, Italy's top soccer league. It would be a triumph, a well-earned conclusion of a season in which the female football team of the Italian city of Siena qualified for promotion into the country's highest league for the first time.
Dropping off the papers in Rome on time wouldn't have been the problem, but the 17,000 ($21,000) registration fee was. The club's traditional sponsor had backed out, due to "an internal decision," as had been explained in the fax, written on letterhead with the Monte dei Paschi Foundation's logo of three beehives at the top.
Valentina Lorenzini is the coach, masseuse and organizer of the soccer club Siena Calcio Femminile. She is a stocky 43-year-old who refuses to believe that it's over, that something has finally come to an end in her city. "We won and we can't be promoted," she says. "How sick is that?"
But there is still time. It's only 8 p.m. Perhaps she'll still manage to find someone.
A Happy Exception
This is the way it's always been in Siena, an idyllic Tuscan city where even the curbstones look as if they'd been chiseled by the sculptor Bernini. It's a city over which the profits of a major bank, Monte dei Paschi di Siena (MPS), were distributed year after year like manna. Sometimes it was 150 million, and sometimes it was even 200 million. It's a lot of money for a city with a population of 55,000 people.
Siena was always considered a happy exception in Italy, a prosperous city with functioning hospitals, recycling and free buses for the schools. And now there isn't even enough money to register the local women's soccer club in Serie A. Siena's coffers are empty, the main bank has to borrow money, the elites have failed and a commissioner has taken control of the city. Siena has gone from being an exception to a reflection of Italy's general situation.
Most locals don't perceive that as a compliment.
It is partly to do with the debt crisis, partly with the Italian state and a lot to do with Siena. It also has a lot to do with the fact that now, at 8 p.m., hundreds of Sienese wearing fake Yulia Tymoshenko-style braids and with pacifiers in their mouths are marching across the Piazza del Campo, banging on drums and waving blue-and-white flags.
The Secret of Siena
They are fans celebrating the victory of Onda ("Wave"), the part of the old city just behind the town hall that won the last Palio di Siena, a horse race held in the city twice a year. The race was more than a week ago, but the celebrations and the street-side banquets continue. And because the winning horse was called Ivanov, the women are wearing Tymoshenko's trademark braids, because the Ukrainian politician's name sounds Russian to them. The pacifiers are supposed to signify that the entire neighborhood was reborn as a result of the horse's victory.
Valentina, the soccer coach, is also part of the Onda. She was baptized as "Onda," and one day in the distant future her body will be laid out in the Onda district's church. That's the way things are here.
The 17 districts, or contrade, are regarded as the city's secret. They have names from the Middle Ages, like Giraffe, Snail and Unicorn, they have their own baptism and death rituals, their own flags, symbols and newspapers, and each has its own capitano, or leader. The daily Corriere di Siena newspaper devotes an entire page to the contrade.
For some this is an exemplary form of communal democracy, and one of its benefits is that it has ensured that Siena has a very low crime rate. For critics, however, the contrade are little more than interest groups dressed up in traditional garb, their goal being to extract as much money as possible from the bank's horn of plenty.
The two views are not mutually exclusive. It is undisputed that the contrade would hardly have functioned as well as they do without access to the profits of Italy's third-largest bank. The city and province of Siena make up the board of directors of the Fondazione Monte dei Paschi di Siena, and the foundation is the majority shareholder in Banca Monte dei Paschi di Siena.
A Heretic's View
"Siena is in the hands of an oligarchy that divides up the key positions," says Raffaele Ascheri, an angry schoolteacher from an old Onda family. Calling himself the "eretico di Siena," or heretic of Siena, he writes a blog and, in various self-published books, paints a picture of a city in which politicians from both sides of the political spectrum and contrada captains squander the spoils.
The heretic's favorite enemy is Guiseppe Mussari, who Ascheri and others consider to be the man who led Siena into its current fiasco. "He doesn't even understand English properly, not to mention the art of banking," Ascheri says. Mussari was the chairman of the foundation for many years and, until April, the president of MPS. Now he is the chairman of the Italian Banking Association (ABI).
The city was pleased with Mussari for years -- extremely pleased, in fact. Whether it was the breeding of threatened Maremma cattle, providing ambulances or putting on the citizens' banquet in the Giraffe district, "la banca" always picked up the tab. It spent 233 million on the city in 2008 and 180 million the following year. In 15 years, MPS doled out about 2 billion, in a city of 55,000.
The procedure resembled the way things work in the sheikdoms of the Persian Gulf. Citizens merely had to submit their applications, and in most cases their dreams came true. Those dreams have included Siena Biotech, a pharmacological research center, an expressway to Florence, a reliquary by Francesco di Vannuccio, a Donatello exhibition, school buses and a swimming pool -- all of them important and worthwhile projects.
Fall from Grace
Even in the crisis-ridden year of 2010, MPS still distributed 109 million. But by the next year the bank's response to requests had changed: "Niente. No more. Only existing projects." These are the words of the man from Fondazione MPS, who does not wish to be named, because every word he utters could drag down the bank's share price even further. His office is in the foundation's palazzo, complete with frescoes on the walls and a Venus by Domenico Beccafumi in the conference room.
It's unclear how long the painting will continue to hang there. At the beginning of the year, the foundation owed 1 billion, primarily to international lenders like J.P. Morgan and Crédit Suisse, creditors that are not easily put off. With liabilities like these, no art collection is safe anymore.
In retrospect, the bank's fall from grace can be dated to 2007. It was a time of mergers, and it was widely believed that small banks no longer stood a chance on the global financial markets -- not even a bank like MPS, which has been in business since 1472 and was lending money when Columbus was still learning how to sail.
- Part 1: Downfall of a Tuscan Paradise
- Part 2: A Revolution and a Disaster