MILAN: Monte dei Paschi di Siena’s (MPS) bold takeover of Mediobanca is the biggest deal yet in a merger wave transforming Italian banking, and its chief executive has said it will position the combined entity for a further round of consolidation.
Immediately at stake is a government ambition to merge Monte dei Paschi with Banco BPM, part of Rome’s long-running effort to create a third major Italian banking group to rival Intesa Sanpaolo and UniCredit .
Banco BPM chief executive Giuseppe Castagna travelled to Rome this week to discuss two merger options for the Milan-based bank: a tie-up with MPS or an acquisition of the Italian arm of Credit Agricole.
The French lender is already BPM’s largest shareholder and folding in its own Italian network would strengthen its grip.
With MPS management focused on how to run the new combined group, Credit Agricole has an edge, a person briefed on the discussions said, adding that the ball was in Castagna’s court.
Contrary to speculation, MPS joining forces at a later stage with a “French BPM” is not realistic and would only provide a bigger distribution network for Credit Agricole’s financial products, a key driver of bank income, the person added.
The French lender partners with BPM in consumer credit and insurance and its strategy in Italy, its biggest foreign market, has been consistently aimed at protecting the distribution capacity for its financial products.
With UniCredit still seen as a threat following a failed attempt in November to take over BPM that angered the government, Castagna’s urgency in securing a deal to shield his bank from any fresh approach will be key.
Were he to find a deal with Credit Agricole that pleases BPM’s shareholders, Rome would struggle to find legal grounds to get in the way, another person with direct knowledge of the matter said.
UniCredit’s presence in Russia gave Rome arguments to set tight terms for its BPM bid on national security grounds, using a set of powers which is under scrutiny by the European Union.
The now-collapsed offer by UniCredit for BPM followed the government’s sale of 5% of MPS to BPM in November, which Rome had hoped would progress its aim of tying the two together.
Italy still owns around 6% of MPS – the world’s oldest bank – after a state rescue eight years ago.
Refusing to let MPS be sidelined as consolidation gathered pace, chief executive Luigi Lovaglio targeted Mediobanca in January with a 16bil or about US$19bil cash-and-share offer, which closed on Monday.
It secured 86.3% of Mediobanca, helped by the latter’s two main shareholders – the heir of late Ray-Ban billionaire Leonardo Del Vecchio and builder Francesco Gaetano Caltagirone – who also became major MPS investors in November. — Reuters
