Banca Monte dei Paschi di Siena (Mps) and Banco Bpm should convene extraordinary board meetings by 31 July to propose to shareholders a merger between the two credit institutions. This is the new move by the CEOs of the two banks, Luigi Lovaglio and Giuseppe Castagna, to create the so-called third Italian banking hub.
The idea is to create a bank that can compete in size with Unicredit and Intesa Sanpaolo. The latter, however, does not agree and has presented a public purchase and exchange offer on MPS in recent weeks. The objective is always the same as that of all banking risks: to control Assicurazioni Generali.
The new MPS and BPM plan
The extraordinary boards of directors of MPS and BPM should be convened this week or at least before the presentation of the quarterly accounts of both, which will arrive on 5 and 6 August. There are three scenarios to evaluate:
- Bpm’s offer on MPS;
- an offer from MPS on BPM;
- a merger.
Fusion itself seems to be the most concrete idea at the moment. In fact, it could be the most acceptable formula with respect to the acquisition for both shareholders and managers.
Will the third banking hub be French?
It would also be a way to form the “third banking hub”, i.e. a bank that could compete in size with Unicredit and Intesa Sanpaolo. The shareholder structure of this new hub, however, would not be entirely Italian.
On the contrary, an important part of the new bank that could arise from the merger would be in French hands. Bpm’s main shareholder is the transalpine bank Crédit Agricole, which already has its own presence in Italy. MPS, on the other hand, is 17.5% owned by Delfin, the Del Vecchio family company that controls EssilorLuxottica, in which it is a partner with the French government.
Relations with Paris would therefore be very strong, a factor to consider given that the last time a bank tried to buy Bpm it was stopped by the Italian Government through the Golden Power, precisely because it was deemed too un-Italian. It was Unicredit, which had only marginal foreign presence within its shareholder base.
The offer from Intesa Sanpaolo and Unipol
Lovaglio and Castagna’s strategy has the same objective as always, to prevent Intesa Sanpaolo’s offer on MPS from being successful. The takeover bid was presented on 8 June and provides for a consideration of 10.09 euros and 16 Intesa Sanpaolo shares for each MPS share. A consideration, at the time of presentation of the offer, of 30.6 billion euros.
The premium to shareholders would be 12.5%. The offer will only be successful if it reaches 66.67% of the capital of the Tuscan bank. However, Intesa Sanpaolo has no intention of keeping all of MPS. In fact, it has an agreement with Unipol insurance to sell it an autonomous entity made up of:
- 635 MPS branches;
- the historic brand Monte dei Paschi di Siena;
- most of the bank’s central structures.
The price would be around 3.5 billion euros.
The real objective is always Generali
Intesa would be held, in addition to 625 branches, also Mediobanca, recently acquired by MPS. This is the most important element of the entire operation, and is also at the center of the attempted merger with Bpm. Because Mediobanca controls approximately 13% of Generali, the largest Italian insurance company, which is the final objective of all banking risk.
Generali has excellent financial results, is a prestigious brand and has an immense real estate portfolio. For this reason, taking control of it is an objective both of the large Italian banks, particularly now Intesa, and of the most important business families in the country: the Del Vecchios and the Caltagirones. It is precisely the latter that, through various shareholdings, drive the decisions of MPS and BPM.
