The people of Siena call it “La Rocca” or the “Castellare” – the fortress or castle. The 14th-century building that serves as the headquarters of the world’s oldest working bank, Monte dei Paschi di Siena, commands the centre of this medieval Tuscan city more like the stronghold of a feudal lord than a modern-day financial institution.
Since its founding in 1472, La Rocca has been Siena’s grand patron, flooding the city with rivers of money in a display of noblesse oblige that made it, as one local man told me, “the city’s critical lung”. The bank has supported pastry-makers, farmsteads, hospitals, palace renovations, art exhibitions and, most famously, the Palio horse race, in which riders representing the city’s rival contrada wards thunder around the shell-shaped Piazza del Campo.
The philanthropic mission of Monte dei Paschi is built into its origins. During a rare private tour of the Palazzo Salimbeni, as La Rocca is officially called, I am shown the founding charter of Monte dei Paschi, which states that the bank has been created to help “the poor, the miserable and the needy”.
In recent decades, Monte dei Paschi’s benevolence rose to such heights that Siena’s citizens, rich and poor, came to call it “Babbo Monte” – Daddy Monte. Yet that historic relationship is now coming to a traumatic end. Daddy is broke.
Italy’s third-largest bank has been “playing with fire”, the Siena University economics professor Antonella Brozzetti tells me over espresso. It has been pushed to the brink of collapse by an ill-advised acquisition, a plunge into complex derivatives it didn’t understand, murky internal politics, and a global financial crisis that turned manageable financial sins into deadly ones.
The bank’s 2007 financial report, issued on the cusp of its downfall, makes for poignant reading. It shows an institution drunk on success, with record profits of €1.4bn. The patrician probity that made it “an Italian success story since 1472” allowed its officials to sniff at rivals responsible for “the ruinous decline of a model based on . . . leverage devoid of any relationship with reality”.
But Monte dei Paschi, too, had caught the global mania for complex derivatives and risky acquisitions. After secretive trades code-named “Alessandria” and “Santorini”, it made a disastrous €9bn play for Banca Antonveneta, which was laden with toxic loans, just a year before the world financial crisis. It was the start of a downward spiral that continues to this day.
Monte dei Paschi was the only bank this summer to fail a European stress test, requiring emergency recapitalisation. There are fears that a collapse could shock the global markets. The bank recently appointed a new chief executive – Marco Morelli, a former head of Bank of America Merrill Lynch in Italy – in its latest effort to persuade investors that it is worth rescuing.
For the people of Siena, the threat of global meltdown pales in comparison with the heartbreak of seeing a historic way of life disappear. Italy can be so insular that people speak of campanilismo – loyalty to your home town’s bell-tower. Siena takes this further, with citizens pledging allegiance not to the town, but to one of its 17 contrade (wards) – which have names such as Dragon, She-Wolf and Little Owl – and exist in a state of permanent rivalry that many describe as “hatred”.
In the deep heart of La Rocca is a hall decorated with works by the Sienese master Domenico Beccafumi. There, the original silken banners of the 17 contrade fan out in a circle of unity and discord that is the story of the city itself.
These emblems are collected here symbolically at the bank’s centre because Monte dei Paschi must not take sides. For centuries, its role has been to keep the 17 bickering children of Siena in a state of harmony, largely through equitable distribution of largesse. The elegant piazza outside Palazzo Salimbeni – created by the bank as a gift to the city – is the only patch of Siena that is officially neutral ground.
Down the street is the HQ of the “Sovereign Ward of the Hedgehog”. There, the contrada’s ex-secretary Paolo Martelli explains just how deep these loyalties lie: “Soon after you’re born, you learn that the hedgehog is the enemy of the she-wolf, and has always been enemy of the she-wolf.” (“And there’s nothing you can do about it!” chimes in his grandson.) Martelli is a former Monte dei Paschi employee. He feels “sadness and rage” about Siena having to struggle with the bank’s debts, he says. “More rage than sadness.”
This combination of melancholy and anger unites the people of Siena, despite their traditional enmities. It all comes back to Monte dei Paschi’s paternalistic role in Sienese life.
Alessandro Socci is a leader of Siena’s Agricultural Consortium, a regional farming co-operative. He fondly recalls how, when he was five years old, a Monte dei Paschi banker went around his neighbourhood handing out piggybanks jangling with 500-lire coins. “A gesture of civic spirit,” he calls it, “and a way to transmit to kids the spirit of saving.” Clearly Monte dei Paschi bosses had lost that spirit by 2008, when they were doped up on derivatives and making disastrous acquisitions.
That night, at the annual celebration of the Aquila (eagle) contrada, I learn how the Monte dei Paschi noblesse oblige is felt by the citizens of Siena as a kind of egalitarianism – which in turn explains why many of northern Italy’s richest cities have long been communist.
“At our party,” says a pensioner named Gianni – who gave only his first name because of lingering taboos about speaking to outsiders – “a bank director is at the grill, serving the construction worker. In the contrada there is no such thing as class.”
This bond between bank and citizenry has echoes inside the Palazzo Salimbeni. I am told that Monte dei Paschi will never sell its art collection, even in these dire times, because the works are inextricably linked to one another, to the palazzo – and to the people of Siena.
Monte dei Paschi’s medieval original structure houses many treasures of the past, but nobody works there now. These days it is merely the ravishing, melancholy shell of a proud institution, brought down by its own folly.
This article appears in the 28 Sep 2016 issue of the New Statesman, May’s new Tories