by Eric J. Lyman
ROME, Nov. 10 (Xinhua) -- Monte dei Paschi di Siena bank, the oldest and third largest bank in terms of assets in Italy, has for the first time in years reported a quarterly profit, showing further sign of recovery.
According to local media reports, the bank earned a profit of 242 million euros (283 million U.S. dollars) in the third quarter of this year. That compares to 3.2 billion euros (3.7 billion U.S. dollars) in losses over the previous quarter.
Over the same three-month period, the company added 1.6 billion euros (1.9 billion U.S. dollars) in deposits, its first quarterly increase in last five years.
All that, combined with the company's return to the Italian Stock Exchange in Milan this month after an 11-month hiatus, are the first sign of recovery for the 545-year-old institution less than a year after the Italian government threw it a 5.4-billion-euro (6.3-billion-U.S.-dollar) lifeline.
Analysts here hold cautious optimistic towards the recovery of the old bank.
"We can't say the company is healthy, but it is like seeing the eyelashes flickering on a patient who had been in a coma," Giampaolo Gabbi, a finance and risk management professor at the University of Siena, the bank's home base, told Xinhua. "When that happens, the patient's family is thrilled, of course, and the doctor must remain cautious."
Cesare Imbriani, an economist with Rome's La Sapienza University, agreed. "It's a good sign, but we won't be able to make any conclusions until we start to see a trend," Imbriani said in an interview.
In the wake of the government bailout, Monte dei Paschi was able to sell off much of its non-performing loans, which until then had been a drag on the bank's balance sheets. As part of the terms of the bailout, Monte dei Paschi also had to re-organize its corporate structure, and it was given permission to circumvent Italy's protective labor laws and reduce workforce and close hundreds of offices.
Commentators say the bank is going towards a healthier, smaller, and more nimble institution.
Pier Carlo Padoan, Italy's minister of finance, who was one of the chief architects of the bailout plan, has said the reorganization has left Monte dei Paschi "very, very healthy in terms of capital requirements," a reference to the ratio of the banks cash on hand to total deposits.
"Most of the factors that led to Monte dei Paschi's difficulties are gone now," Alberto Majocchi, an economist and finance expert with Italy's University of Pavia, told Xinhua. "Now we have to see how well the bank will perform going forward. But all the factors are in place, including positive signs from the Italian economy."
Because of huge losses in the first half of the year, Monte dei Paschi is all but guaranteed to finish the year in the red for the 10th consecutive year when it reports its full year results next February. But analysts said the news is a sign to investors and customers that the worst may be past.
