The dealmaker’s drive to create an Italian bank champion

  • Banking
  • Thursday, 20 Feb 2020

MILAN: Carlo Messina may seem like an unlikely deal maker to kick off the inevitable wave of Italian bank mergers.

Having failed three years ago to combine with insurer Assicurazioni Generali SpA, the 57-year-old Intesa Sanpaolo SpA chief on Monday made the boldest move of his career with an unsolicited offer for Unione di Banche Italiane SpA that will create a national champion and keep a prized wealth manager out of the hands of competitors.

The bid would also avert the risk of his bank being asked to buy Banca Monte dei Paschi di Siena SpA, the emblem of Italy’s banking woes.

”Messina’s move is brilliant because he’s acquiring a rival that was expected to lead the wave of mid-size mergers in the Italian banking industry,” said Carlo Alberto Carnevale Maffe, a professor at Bocconi University in Milan. Acquiring UBI also means Intesa won’t be saddled with Monte Paschi, which is still fragile and risky, according to Maffe.

Italy, home to one of Europe’s most fragmented banking markets, may be ripe for consolidation after lenders took strides in cleaning up a mountain of bad loans that piled up over the last decade.

That could have posed a threat to Intesa’s position as the top choice for wealthy Italian families if smaller rivals combined forces with UBI.

“After some analysis, we figured out that UBI was the best candidate for Intesa Sanpaolo,” Messina said in a press conference in Milan on Tuesday. “With this deal we surpass Unicredit, SocGen, Credit Suisse and get close to Deustche Bank in term of revenues.”

The €4.9bil all-share offer was made without the knowledge of UBI Banca’s board, according to people with knowledge of the matter. The directors will meet Wednesday to discuss the bid. A UBI official declined to comment.

If the deal goes through, Messina - with his thick, floppy hair and a sense of confidence both in himself and Intesa - will show once again that he’s a consummate political player on the Italian banking scene.

In 2017, his firm took over the good assets of Banca Popolare di Vicenza SpA and Veneto Banca SpA for €1 and also received billions of euros from the state to maintain its capital ratios and cover losses from bad loans and legal risks.

That takeover made Intesa the leading banking group in Italy’s northeast, one of the country’s wealthiest regions. It probably also served as a warning that Messina might once again be called on to snap up a bank Italy wants to see in new hands: Monte Paschi.

The state is obliged to sell its 68% stake in that lender after its weak controls and deficient lending standards led to repeated taxpayer bailouts.

How that exit would take place is unclear, meaning it was a potential catalyst for deal making.

With the UBI bid, Messina may be trying to steer clear of Monte Paschi while also placing Intesa at the heart of the rebound in Italian banking sector. — Bloomberg

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