Economics News Italy

Siena’s cultural organisations threatened by banking scandal

World’s oldest bank receives $4.1bn bailout, leaving its formerly generous foundation with little to give

The beleaguered bank’s headquarters at Palazzo Salimbeni

The banking scandal that threatens to sink the Monte dei Paschi di Siena (MPS), the oldest continuously operating bank in the world (founded in 1472), and its eponymous foundation spells trouble for the region’s art and heritage. The Fondazione Monte dei Paschi di Siena, which was founded in 1995 and is the bank’s biggest shareholder with a 35% stake, is facing debts of €350m and a wave of criticism of the bank, the third largest in Italy, which it has effectively controlled since the mid-1990s. Until recently, the foundation was a ubiquitous patron of the arts throughout the city and the region, having contributed a total of around €400m to Siena and Tuscany’s heritage since its inception.

“Until the bank is back on its feet, the future remains uncertain,” says ­Gianni Tiberi, the foundation’s head of communications, “and [the foundation] has to concentrate on the debt before anything else.” Tiberi says that the foundation has had to cut back drastically on almost all of its arts and heritage funding, “apart from the essential [projects], the ones without which an organisation would cease to function”. The sole recipient this year is the Accademia Musicale Chigiana, the city’s music institute, which will receive only €1m, down from €2.85m in 2011. Long-term projects, such as the ongoing €52m restructuring and restoration of Santa Maria della Scala—one of Europe’s oldest hospitals, and now a museum and one of the city’s main cultural hubs—are now in limbo.

In 2008, MPS bought Antonveneta, another Italian bank, for €9bn from Santander—a poor deal, according to many commentators. Weakened by a transaction it could barely afford and the growing global financial crisis, the bank began to hide mounting losses in complex derivatives transactions with Nomura and Deutsche Bank. It was forced to seek a €4.1bn bailout package from the Italian government in January this year. With its coffers almost empty, the foundation—the board of which had rubber-stamped the bank’s activities in the past—can no longer give as it used to.

The foundation’s last full year of activity was 2010, when it donated a total of around €80m to local institutions and organisations, around €15.6m of which was destined for arts and heritage projects. The foundation donated €1m to the Fondazione Musei Senesi, which oversees the city’s museums. Its director, Luigi Di Corato, describes the bank’s foundation as “irreplaceable” and says that it “has been instrumental in preserving the region’s cultural heritage”. Its donations that year also included funding for the restoration of churches, monuments, archaeological sites and Medieval buildings, and money for other museums and cultural institutions in Siena and the surrounding area. The foundation was also instrumental in sponsoring exhibitions, through Vernice Progetti Culturali, its operating company. These included “Siena and Rome”, which was staged at Santa Maria della Scala between 2005 and 2006, and “Gian Lorenzo Ber­nini, Painter”, at Palazzo Barberini, Rome, from 2007 to 2008.

Fire sale?

When the Italian press reported in early February that the foundation had held meetings with Sotheby’s, fears were raised that it was attempting to sell its art collection. This would be of little benefit, given that the collection is valued at only €7.6m. The bank itself holds a collection valued at €115m. Gianni Tiberi denies the rumours of an impending sale, and says that the meeting was geared towards potentially raising money through loans and exhibitions abroad.

The severity of the crisis makes it unlikely that the foundation will ever regain its status as a financial heavyweight, meaning that the region’s many cultural institutions will have to either attract new patronage or devise new strategies for survival. “The Fondazione Musei Senesi is already looking to move away from being a financially dependent institution by pairing new sponsorship sources with dynamic partnerships with global brands, such as Micro­soft and Google,” Luigi di Corato says. “The rest of the country needs to follow suit if we are to successfully bear the cost of our cultural heritage.”

Meanwhile, Anna Carli, the leader of the team that is hoping to make Siena a candidate for European Capital of Culture in 2019, remains positive about the work done so far, much of which was sponsored by the MPS foundation. She says that the project is still going ahead.

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