Inside The World's Oldest Surviving Bank That Has Been Running Since 551 Years

Founded 551 years ago in the year 1472, an Italian bank named Monte dei Paschi di Siena is the world¡¯s oldest surviving bank that is still running.

The World's Oldest Surviving Bank

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The world's oldest surviving bank, Monte dei Paschi di Siena, dates back to 1472 in the Tuscan city from which it derives its name. At the time, the city of Siena was a republic, and the institution was created to offer loans to "poor, miserable, or needy persons."

In the past five and a half centuries, or 551 years to be precise, the prospects of the bank and the city of Siena became interconnected. By 1624, a decision by the Medici Grand Duke to guarantee accounts held at MPS laid the foundations of the deposit protection schemes that are now used to provide confidence to savers in the banking system worldwide. The Grand Duke used the proceeds of pasture he held in the Maremma, in south-western Tuscany, to provide the guarantees.

For centuries, the bank had a reputation for being conservatively run while being generous to the local economy. The bank funded businesses and charities and supported the famous Palio di Siena horse race. The past few years have witnessed many instances when it was reported that the bank was nearing its end amid a pile of losses, but it is still running to date.

As per a UN report, the bank has more than 1,500 branches and 200 specialty centres and offers its services to 4.5 million customers.

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Timeline: Looking Back At The Bank¡¯s History

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1472

Monte dei Paschi di Siena (MPS), the oldest running bank in the world, originated in 1472 as a Monte Pio (pawn agency) at the behest of the Magistracies of the Republic of Siena and was expressly instituted to give aid to the more underprivileged classes of the population during a time of particular hardship for the local economy. Its activity, continuing the great commercial and banking traditions of the city of Siena, evolved rapidly towards classical banking, especially after the reforms of 1568 and 1624, as per the bank's website.

1624

In particular, the Charter of 1624 launched the adoption of progressive operating structures, which bound the activity of the Monte even more closely to the economy of the area where it was present. As a result of this reform, the bank changed its name to Monte dei Paschi, by which it is still known today; on this occasion, Grand Duke Ferdinand II of Tuscany granted the Monte¡¯s depositors a state guarantee, entailing for this purpose the revenues from the state-owned pasture lands in the Maremma (known as the "Paschi").

Monte dei Paschi gradually extended its activity to larger and larger areas of Tuscany, and at the time of Italian unification, it was one of the most solid banks in the country, initiating new activities including land credit, a first for Italy.

1907-1930

The Bank expanded beyond the boundaries of its two traditional provinces (Siena and Grosseto) to begin operations in a growing number of regions (opening branches in Empoli, Florence, Perugia, Naples, and Rome) and participated in the founding of the Banca Toscana.

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Monte dei Paschi di Siena (MPS), the oldest running bank in the world, originated in 1472 as a Monte Pio (pawn agency).

1946-1989

The bank consolidated its presence throughout Italy and expanded abroad, opening branches and offices in the major financial centres of the world: New York, Singapore, Frankfurt, and London.

1936

Monte dei Paschi di Siena, in recognition of its public juridical status, was officially declared a public-law credit institution and received a new charter, which, with some later modifications, remained in effect until 1995, when the bank was profoundly transformed on the institutional level.

1995

A decree by the Minister of the Treasury dated August 8, 1995, gave birth to two entities: the Fondazione Monte dei Paschi di Siena and the Banca Monte dei Paschi di Siena S.p.A. The foundation has as its statutory purpose the pursuit of aims of aid and charity as well as of social benefit in the sectors of scientific research, education, health care, and the arts, especially in the city and province of Siena, and is the direct heir of the original Monte, a public law institution. The second is the bank proper and the leader of the Group, carrying out activities of credit, finance, and insurance, as the bank's website mentions.

1990-1994

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MPS was the first bank in Italy to diversify into insurance through MontePaschi Vita. It entered the sector of mutual funds with Ducato Gestioni, reinforcing its presence in mid- and long-term credit through the acquisition of Mediocredito Toscano and the Istituto Nazionale per il Credito Agrario, whose activities were absorbed into MPS Banca per l¡¯Impresa. MPS also acquired controlling shares in foreign banks in Belgium, Switzerland, and France.

2000-2005

With its debut on the stock exchange, the bank began an intense phase of territorial and operative expansion, marked by the following principal developments:

Acquisition of participation in some regional banks with deep roots in their own territory, such as the Banca Agricola Mantovana;

Reinforcement of the structures of production in strategic market segments through the development of product companies: Consum.it in the sector of consumer credit; MPS Leasing and Factoring in the parabanking sector; MPS Finance in investment banking, MP Asset Management SGR in managed savings, MPS Banca Personale in financial promotion; Concentration in MPS Banca per l¡¯Impresa of the activities in the sector of specialised credit to businesses and of corporate finance services;

Development of commercial productivity, with the aim of improving the level of assistance and consultancy to investors and businesses, through service models specialised as to segments of the clientele;

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1999

On June 25, 1999, the Banca Monte dei Paschi di Siena was quoted on the Milan stock exchange, marking a fundamental milestone in the process of strengthening the Group¡¯s size and competitiveness. ?

Acquisition of Banca Antonveneta, a company founded by a process of mergers and aggregation of banks with strong territorial roots, which enabled it to transform itself from a small regional bank to a bank of national importance, while maintaining, at the same time, a close relationship with local communities and playing an active role in supporting and enhancing the economic fabric in which it operates. ?

2014

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2017

As per the bank's website, following a capital increase of 8.3 billion euros, the Ministry of Economy and Finance became MPS¡¯s majority shareholder. At the same time, the bank began a process of radical transformation geared towards innovation, the rationalisation of resources, and bringing the customer back to the core of its business.

2021

MPS posted a 1.69 billion euro loss for 2020 as it opens its books to potential buyers. UniCredit enters the race to buy the bank, but talks collapse.

2022

MPS announced a 2.5 billion euro capital increase for October and secured a pre-underwriting agreement with banks.

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