FOR MONTHS Italian finance has been gripped by the €16bn ($18bn) takeover by Monte dei Paschi di Siena (MPS), the world’s oldest surviving lender, of Mediobanca, an investment bank which also happens to own a 13% stake in Generali, a giant insurer. Completed last September, it was the biggest European banking merger in years, and one of the biggest deals in any industry on the old continent. It involved the abrupt sacking of MPS’s boss by the board in April and his rapid reinstatement by shareholders.
If that was not dramatic enough, on June 7th Banco BPM, Italy’s fourth-largest lender, approached MPS’s directors proposing a tie-up that would create a heavyweight with a roughly €50bn market capitalisation. The next day Carlo Messina, boss of Intesa Sanpaolo, Italy’s biggest domestic lender, dismissed BPM’s offer as an inconsequential “love letter” and launched a rival and, he claimed, less frivolous €31bn bid for MPS. The result of that deal would be a behemoth worth about €130bn.
Intesa is offering MPS’s owners 16 newly issued shares of its own for every ten in MPS, plus €1 per share on top of that. That represents a premium of 12.5% on MPS’s closing share price at the end of last week. Intesa has called a shareholders’ meeting for September 10th to approve the necessary issuance of shares. If both banks’ shareholders go for it, the deal would create the euro zone’s second-biggest lender by market value after Santander of Spain.
To allay competition authorities’ worries, Intesa has also struck a deal with Unipol, an insurer that has the biggest holding in another large Italian lender, BPER, to divvy up MPS’s retail business. Intesa would keep only 625 of its target’s 1,260 branches. The brand and many of MPS’s central operations would go to BPER, creating Italy’s third-biggest banking group.
That might satisfy Italy’s trustbusters. Giorgia Meloni’s conservative—and nationalist—government would certainly prefer it to Banco BPM’s offer. Crédit Agricole, a French bank, holds a stake of 20% in BPM. Politicians in Rome sometimes cheer on the equally drama-filled pursuit of Germany’s Commerzbank by Unicredit, Italy’s largest lender by market value. They may prove less enthusiastic about letting foreigners—and especially the French, who have already swallowed much of Italy’s once proud fashion industry—grab a bigger slice of Italian finance.■
