1 hour ago
9
The merger that was supposed to create Italy’s second-largest lender is dead. Now the real chess match begins.
Banco BPM formally pulled the plug on merger discussions with Banca Monte dei Paschi di Siena (MPS) on July 31, citing a lack of definitive progress and resistance from its largest investor, Crédit Agricole. What started as a friendly “merger of equals” pitch in early June has devolved into something far messier, with MPS now exploring a potential takeover of the very bank that just walked away from the table.
How the deal fell apart
Rewind to June 7, when Banco BPM floated the merger-of-equals proposal. The combined entity would have boasted a market capitalization of roughly €50 billion, making it a genuine heavyweight in European banking. MPS brought a valuation of around €27.3 billion to the conversation. Banco BPM came in at approximately €20.3 billion.
The very next day, June 8, Intesa Sanpaolo lobbed an unsolicited €30.6 billion ($35.3 billion) takeover bid for MPS.
Crédit Agricole, Banco BPM’s biggest shareholder, proved to be another obstacle. The French banking giant apparently had little appetite for a merger that would dilute its influence, and its resistance effectively killed any remaining momentum. By the end of July, Banco BPM’s board concluded there was no path forward and terminated discussions.
Now MPS finds itself in an unusual position. Rather than being the target, it’s considering becoming the acquirer.
The Italian banking shakeup
To understand why this matters, you need to appreciate just how far MPS has traveled. The bank, founded in 1472, spent the better part of the last decade as a cautionary tale in European finance, enduring billions in losses and government bailouts.
The Italian government stepped in as a major shareholder during the rescue. But Rome has been steadily reducing its exposure, cutting its stake to 11.7% after selling 15% for €1.1 billion over the preceding years.
A merger with Banco BPM would have created a domestic champion large enough to compete with Intesa Sanpaolo and UniCredit while giving the government a graceful exit from its remaining position.
Instead, MPS is now evaluating multiple strategic options simultaneously, including Intesa’s massive unsolicited bid and the possibility of pursuing Banco BPM through a takeover rather than a merger.
What this means for investors
For MPS shareholders, the calculus is complicated. Intesa’s €30.6 billion offer represents a significant premium, and there’s an argument that accepting it and moving on is the cleanest outcome.
Banco BPM investors face their own set of questions. Walking away from the merger removed one source of uncertainty, but a hostile or semi-hostile approach from MPS would introduce a new one. And Crédit Agricole’s role as both Banco BPM’s largest shareholder and a potential obstacle to any deal adds another layer of complexity.
The Italian government, still holding 11.7% of MPS, has its own political considerations. Rome has historically preferred domestic consolidation over foreign acquisitions, which could influence how regulators view any competing bids.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
English (US) ·