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.
A Revolution and a Disaster
When major Dutch bank ABN Amro was broken up, the Italian affiliated bank Antonveneta, which was headquartered in the country's wealthy northeast, was sold to the major Spanish bank Santander. After taking over Antonveneta, the Spaniards decided to sell it again and received an offer of about €7 billion from the French bank BNP Paribas.
The Sienese offered an unsolicited bid for Antonveneta that was €2 billion higher than the BNP Paribas bid. It was a price that only an aficionado would pay, a price paid by people who apparently know little about financial markets but a great deal about the history of the Palio horse race, the contrade system and other circles of power. The city administration gave its blessing to the deal. "There will be great benefits for the shareholders," declared Franco Ceccuzzi, a member of the leftist Democratic Party who later became the mayor of Siena. That was in November 2007.
A few weeks earlier, the British bank Northern Rock had run into refinancing problems. Half a year later, the financial crisis was in full swing and the MPS share price had turned sharply downward. MPS had partly financed the Antonveneta acquisition with a capital increase of €5 billion, to be paid by the shareholders -- primarily the majority shareholder, Fondazione MPS. The foundation had to scrape together more than €2 billion to help finance the purchase of Antonveneta.
Another problem for MPS is that it holds more than €25 billion worth of Italo bonds, or long-term Italian government bonds. These securities are no longer necessarily treated as collateral, especially after the US rating agency Moody's downgraded Italy's credit rating once again in mid-July.
To make matters worse, the European Banking Authority, during its stress test, discovered a capital shortfall at MPS and insisted that the bank increase its equity ratio by €3.2 billion. That was the point at which the foundation was forced to bow out. It decided to sell 15 percent of the bank. It was a revolution -- and a disaster.
Act of Betrayal
It's "a difficult moment, but it will pass," says Franco Ceccuzzi, who recently resigned as mayor of Siena after part of his center-left coalition refused to approve his budget. At the moment, proud Siena is being run by a commissioner from Rome. "It was a betrayal, by people who didn't like my new beginning," says Ceccuzzi, a 45-year-old with a fixed gaze and soft brown eyes. He is a son of "Red Tuscany," the progeny of Communist farm workers.
"It was a mistake for a municipality to try to control the majority of the shares," Ceccuzzi admits. "It overwhelmed the foundation financially when the crisis arrived." A portrait of the French revolutionary leader Robespierre hangs on the wall behind him. It's part of the logo of the agency that does public relations for Ceccuzzi. "A public administration can barely regulate itself," he says. "So how can it control something as complicated as a bank?"
In May, Moody's downgraded the venerable MPS once again, and noted that the outlook on its rating was "negative." In late June, the bank's new chief executive, Fabrizio Viola, obtained another government loan of almost €2 billion. MPS was the first Italian bank to require a government bailout.
Viola is a banker from Milan, chubby and bald and certainly not a man for talk shows, which is precisely why he was appointed as the new chief executive. Most importantly, Viola isn't from Siena. Instead, he is seen as the bank's outside rescuer, a kind of commissioner -- the Mario Monti of the Monte, if you will. "We remain a bank that does its lending business in traditional fashion, a bank that has its roots in all of Italy," says Viola. He also insists on drawing clear distinctions among the bank, the foundation and the city.
The fresco on the wall behind him depicts an apocalyptic scene filled with contorted, half-naked figures stretching their arms to the sky in desperation. "It doesn't mean anything," says Viola, when asked about the picture's significance. "I also don't wish to comment on the strategic decisions made by my predecessors. I prefer to look to the future. At the time, there was probably a particular desire to expand a bank like MPS, so as to remain competitive at the national level."
Viola says that he and the city have agreed to a restructuring plan. "It will be painful for some people, but certainly not just for the Sienese."
The plan calls for closing 400 branches by 2015, or one in seven branches, eliminating bonuses and cutting 4,600 jobs. Viola aims to save €630 million.
Siena hardly runs the risk of becoming the Naples of Tuscany. Tourists will continue to show up in droves, as long as the city has its cathedral, the Torre del Mangia tower casts its shadow over the Campo, and the Palio horse race is held twice a year. But without "la banca," the city's sugar daddy, the underlying confidence that everything will turn out well for the city is gone.
'We Have to Rely More on Ourselves'
Transportation for the elderly and the sick is no longer free. Siena Biotech had to apply for a redundancy package for a large number of its employees. The university is deeply in the red and will probably have to close some of its institutes. For the first time in years, there were furious marches in the old city this spring that had nothing to do with the Palio.
"It was like a panic at first," says Caterina Barbetti, president of the Giocolenuvole children's club. She recently had to cancel her free programs. "People had gotten used to free blood tests, school buses and children in the summer only having to deal with the question of whether to go sailing or riding. Those days are gone."
She fears that only more well-off residents will be able to afford public services, in a city that had previously included the bank's payments in its budget. But the onset of reality in idyllic Siena isn't such a bad thing, she says. "Now we just have to rely more on ourselves."
There are no fewer than 330 volunteer organizations with 27,000 active members in the province of Siena, which make for a strong and resilient social network. "We can handle the crisis more effectively than other cities," says Simone Pellegrini, head of the provincial department of welfare, education and employment. "There is more than just the solidarity of the contrade. There are donations for all kinds of things. In Siena, you can live a dignified life even when you have less money."
That, too, is something Siena has in common with the rest of Italy, and which clearly distinguishes it from Germany: An economic downturn doesn't necessarily lead to a social crisis.
Franco Ceccuzzi, the former mayor, poses in the street for a photo, against a background of brick walls which are the color of burnt sienna in the afternoon sun. The deadline to register for Serie A expired yesterday evening. Meanwhile, in the Onda district, the tables have already been set up for the next public banquet. Life goes on. Ceccuzzi says he will run again, and that his party supports him.
"Come to the next Palio in August," he says. And, almost automatically, he adds: "The bank will cover your expenses."