Master and servant of the wealthy city of Siena, the illustrious private bank has been plying its trade since 1472, adapting and growing ever richer with the changing times. Now it faces perhaps the biggest shake-up of its five-century history: a partial listing on the Milan bourse that will finally give the public a bite at the plump Monte dei Paschi cherry.

The aim is to raise funds to finance growth and strategic expansion plans, enabling the dowager of Italian banking to compete in an increasingly cut-throat business world. But that means loosening the countless ties that bind the bank to Siena, inextricably connecting it with just about everything that goes on inside the city's medieval walls.

"Nothing happens in Siena unless Monte dei Paschi is involved," says one senior manager. "The city and the bank are so close I think nothing can dividethem." Spokesman Maurizio Bianchini, who was born a stone's throw from the bank's sumptuous 13th-century headquarters, says its deep association with the city is a secret of its success. "Everyone in Siena either works at Monte dei Paschi, has worked here, knows someone who works here or dreams of working here," he says.

Power of life and death
"American tourists are always fascinated by Monte dei Paschi. It's older than their country," smiles Bianchini. The bank's original incarnation was as a "Monte di Pieta", a charitable body designed to combat usury. The Monte's statutes spelt out its tight link with the city. Approving them on March 4, 1472, the General Council of the Commune of Siena "resolved and ordained that for all future time the Monte della Pieta shall be set up for the city of Siena..."

The Monte lent money on the security of pledges, attracting deposits from both private individuals and public bodies.

But a startling reform of 1568 gave Monte officials power beyond the wildestdreams of the most ruthless of modern-day bankers -- penal jurisdiction over customers or employees, with the right even to impose the death penalty. Sentences required confirmation by the Grand Duke of Tuscany until 1624, when a reform handed Monte's Board of Deputies "full and absolute jurisdiction, authority and power in civil cases directly or indirectly concerning the interest of the Monte."

No right of appeal was allowed. No one was ever executed, but one bank employee came close in 1629. Sentenced by the board to hang for fraud, he escaped death only be seeking sanctuary in a Franciscan convent. MPs retained the power of life and death until 1783.

Long and lucrative history
Meanwhile, Monte's business gradually evolved from loan-making to other banking operations. Typical of its large-scale lending was advancing funds to livestock breeders to help them rear animals in the depressed Maremma region.

A royal edict of 1624 created Monte dei Paschi, a Montedella Pieta offshoot thatfunctioned as a real bank. The bank's Magistrature-forerunner of the present-day board of directors-was composed of eight noblemen.

Siena's destitute and convents of nuns received half the Monte's profits. The other half went to poor peasants. Monte della Pieta and the Monte dei Paschi merged in 1783, and in 1833 the institution won the right to establish an affiliated savings bank in Siena. MPs spread its wings when it won the right in 1866 to extend its operations over the whole of Tuscany. A year earlier, it had received permission to engage in land credit business not only in Tuscany but also in the provinces of Umbria and Pescaro.

The bank's strong roots in wealthy Tuscany -- it did not open a branch outside there for centuries and almost half of its branches are still in the region - provide a deep pool of liquidity and has helped make it the money-spinner it is.

It enjoys a return-on-equity ratio of around 10 per cent, in line with Italy's biggest banks, and saw net profit soar 139 per cent yearon year in the first half of 1998, according to the most recent figures available. Small wonder that not all Sienese welcome the prospect of sharing the spoils with outsiders. It is no secret that Siena Mayor Pierluigi Piccini -- who also happens to work at MPs -- is not keen on the float, of around 25 per cent of the bank by the summer.

Close ties bind bank and city
Of Siena's 60,000-strong population, some 3,000 are estimated to work for the bank.

Twenty per cent of its profit goes to public bodies. Siena's famous Palio horse race, its university, its churches: all receive crucial funding from Monte dei Paschi. MPs was owned by Siena city and province until 1995, when it was forced by law to become a joint-stock company. The city council appoints four of the eight members of the semi-public charitable foundation that now owns 100 per cent of the bank.

But a 1994 directive now obliges foundations to generate more than 50 per cent of their revenue from non-banking sources. Paradoxically, bankstaff say MPs must spread its ownership through a float in order to remain master of its own destiny.

"If we want to expand we need to raise capital," says the senior manager. "We have to be strong enough to resist predators. If we don't expand, we run the risk of being eaten".

The extreme conservatism of the past is now slowly giving way to a less risk-averse outlook as new blood comes in from non-Sienese and internationally experienced staff, he says.

Staff concede MPs could lose some control over its affairs when it floats. But they believe the deep Siena hue of the bank is unlikely to fade.

A 1481 fresco which still adorns the headquarters, Our Lady of Mercy by Benvenuto di Giovanni del Guasta, depicts the people of Siena gathered under the shelter of the Virgin's mantle.

That potent image still resonates today.

"Montepaschi staff have always considered the bank a big 'mamma' who helps everyone in their needs," says the manager.