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New Italy Banking Force Begins to Emerge From Monte Paschi Deal

(Bloomberg)

(Bloomberg) -- A possible new force in Italian banking has begun to take shape, after regional lender Banco BPM SpA took a major stake in rival Banca Monte dei Paschi di Siena SpA. 

Banco BPM on Wednesday snapped up 5% of its rival as the Italian government unloaded most of its remaining stake.

That came just a week after BPM announced a takeover bid for Anima Holding SpA in a deal that could create an investment firm overseeing €220 billion in assets. Anima itself acquired 3% of Monte Paschi in the government sale.

BPM’s move sets the groundwork for it to buy more shares later on, while also creating a barrier for other banks that may have been considering an investment in Paschi. 

Italy’s banks have money to spend, having seen their profitability surge on higher interest rates. UniCredit SpA in September said it had taken a significant stake in Germany’s Commerzbank AG, and that it’s weighing a full acquisition. It also bought a Romanian bank about a year ago, and rival Intesa Sanpaolo SpA did the same.

BPM has been a beneficiary of higher rates too, with pretax profit rising 20% in the first nine months of the year. 

Yet Paschi arguably offers the clearest example to date of an Italian banking rebound. 

The bank, known as the world’s oldest lender, was repeatedly pushed to the brink of collapse by souring loans before years of restructuring, nationalization and billions of euros in fresh capital ultimately turned it around.

Paschi reported a record profit for last year and resumed paying dividends after a 13-year break. 

The Siena, Italy-based bank has since become the most important part of an Italian government plan to forge a lender with scale at least approaching UniCredit and Intesa, both of which have market values of more than €65 billion. 

The stake sale, which went exclusively to a group of four Italian investors, marks the first major step in that direction after previous placements were taken up by institutional investors. 

BPM said Wednesday it’s not planning to raise its stake in Paschi above 10%, appearing to rule out a full acquisition.

Still, JPMorgan analysts including Delphine Lee wrote in a note on Thursday that “we would not completely rule out a takeover,” as BPM could still change tack. 

Anima sells its products through partnership agreements, with BPM and Paschi among its most important distribution channels. The company in a statement Wednesday stressed the importance of its partnership with Paschi, underscoring the reasoning behind its investment.

--With assistance from Joe Easton.

©2024 Bloomberg L.P.