A Fresh Wave of Bank Consolidation in Italy

Italy is witnessing another round of bank consolidation. Recently, Intesa Sanpaolo and Unipol have made significant moves that will affect where investments go. On Monday, Bper initiated a Public Purchase and Exchange Offer (OPAS) for the banking group Monte dei Paschi di Siena (MPS), which is valued at about 30.6 billion euros. The Italian government still holds a small stake, managed by the Ministry of Economy.

Unipol has plans to present a proposal to Bper, its main shareholder. This merger with the Siena branch could lead to the formation of a new entity known as Monte dei Paschi Bank. To facilitate this, Unipol Assicurazioni is preparing to invest up to 2.5 billion euros.

If this merger happens, Intesa Sanpaolo will emerge as Europe’s second-largest bank by market value, further stirring the landscape of both Italian and European banking.

In December, MPS completed its acquisition of Mediobanca, which has a stake in the insurance giant Generali, after extensive bidding and dialogue, which also engaged BPM and UniCredit, alongside discussions with the Italian government and the European Commission.

Banking Services Competition

This move alters Banco BPM’s strategy, which had seen Intesa and Unipol propose a friendly merger of equals with MPS just the day before.

Banco BPM’s aim, as well as that of the French group Credit Agricole, which holds 20.1%, is to form a substantial banking entity that would disrupt the current duopoly dominated by Intesa Sanpaolo and UniCredit in the Italian market.

“Anyone thinking they can win over their desired partner merely by sending a letter is quite naive,” said Carlo Cimbri, Unipol’s Chairman. He spoke on the competitive landscape at a recent press conference in Milan that addressed a strategic plan with Intesa Sanpaolo concerning MPS.

However, for the Milan bank, executing this strategy will be complicated due to Intesa’s OPAS halting transactions and alternative offers through a rule of passivity, which is in place during the offer period. This must conclude by December 2026.

The Emergence of a New Banking Giant

According to a report from Corriere della Sera, on September 10, Intesa Sanpaolo called for an extraordinary shareholders meeting. This meeting will discuss a capital increase of 5.7 billion euros aimed at supporting the acquisition of MPS, Mediobanca, and their assets.

Through this merger, Unipol will gain 635 branches from Monte dei Paschi. This adds direct funding of 55 billion euros, loans to about 42 million clients, profits ranging from 400 to 460 million euros, and up to 20 billion in risk-weighted assets, retaining the MPS brand and approximately 2 million customers.

At this juncture, Bper’s role comes into play: Unipol aims to combine efforts with the “new” MPS and rename the combined entity as Monte dei Paschi Bank.

To finalize this transaction, Unipol intends to request the board’s authority to increase its capital by as much as 2.5 billion euros during an extraordinary general meeting yet to be scheduled.

It is anticipated that the merger will be completed by December. This new banking group aims to bolster its contribution to both the social and real economy, positioning itself as a leader in Europe.