Inside the battle to break up the world’s oldest bank
Monte dei Paschi emerged from public ownership to become an improbable consolidator. Intesa and BPM have it in their sights
For a few hours on Sunday, executives at Monte dei Paschi di Siena thought they had dodged a bullet. As rumours swirled that Intesa Sanpaolo was preparing to swoop on the Tuscan lender, a letter of interest from Banco BPM raised hopes that a rival bidder might persuade Italy’s biggest bank to hold off.
The relief did not last. Late in the evening, MPS chief executive Luigi Lovaglio received a call from his counterpart Carlo Messina: Intesa was going public with its bid the next morning.
“We worked on this transaction for a very long time. BPM tried to anticipate the real offer, which was our offer,” Messina said on a call with analysts on Monday.
“I like Giuseppe Castagna [the BPM chief executive], he’s a friend . . . he’s a great guy. But that [letter] is not an offer.”
Messina’s gambit values MPS at about €30.6bn, a 12.5 per cent premium to its closing price on Friday. The purchase would be funded through a mix of newly issued Intesa shares and cash, offering MPS investors 1.6 Intesa shares and €1 for each share they own.
But the proposal also comes with an unusual carve-out plan: Intesa has agreed the sale of the MPS brand, hundreds of branches and vital operating assets to BPER Banca’s main shareholder, insurer Unipol.
That would allow Intesa to retain the more profitable parts of the business — including investment bank Mediobanca and its prized 13 per cent stake in insurance company Generali — as well as to minimise competition concerns.
“This is basically Intesa buying MPS without buying MPS but only Mediobanca and its assets . . . which makes the drama over the past year [look rather pointless],” said one banking executive in Milan.
The move on MPS is the latest twist in a dizzying consolidation saga that has engulfed Italian banking since the government returned the lender to private hands in late 2024, seven years after bailing it out.
What followed has been a flurry of overlapping bids, shifting alliances and boardroom battles that demolished long-established power structures in Italian finance.
Through the course of last year, MPS emerged as an unlikely consolidator with its improbable — yet successful — pursuit of Mediobanca, while UniCredit, Banco BPM, Generali and a cast of influential shareholders were drawn into an increasingly tangled contest over who would control some of Italy’s most prized financial assets.
Yet the fate of MPS remains far from certain.
Unipol’s chief executive has sparked an outcry in Italy by disclosing plans to cut “di Siena” from Monte dei Paschi’s name should the deal succeed.
If Intesa does emerge victorious, the deal for MPS would create the second-largest banking group in the Eurozone by market capitalisation and cement Intesa’s dominance of Italian banking.
It would also solve a crucial issue for Rome: who has control over Generali, arguably the crown jewel and one of the largest investors in Italian government debt.
Prime Minister Giorgia Meloni’s government, which has long sought to prevent a foreign investor from gaining control of Generali, would support Intesa holding a major stake, said people familiar with the matter. Intesa’s CEO Messina was viewed as a “safe pair of hands” in Rome, one of the people said.
UniCredit has also built up a large stake in Generali over the past year and Rome sees the country’s two largest lenders as good long-term institutional investors in the insurer, the people said.
A sale to Intesa is also seen as preferable to a deal between Banco BPM and MPS, the people said, because of fears about Crédit Agricole’s increasing influence at BPM and worries that the French lender could attempt a full takeover in future.
But not everyone is averse to a deal with BPM. In November 2024, Meloni’s government sold BPM a 5 per cent block of MPS shares, part of a plan to create a “third pole” in Italian banking that would counterbalance the strength of Intesa and UniCredit and be more favourable to Rome.
Finance minister Giancarlo Giorgetti was an early backer of that plan — which was disrupted by UniCredit’s tilt at BPM, a deal the government ultimately scuppered — and still sees the outcome favourably, said people familiar with his thinking.
Although BPM’s expression of interest falls short of a formal offer, it has raised the possibility of an alternative transaction in the form of a merger of equals, rather than the de facto break-up envisaged under Intesa’s proposal.
Should BPM decide to table a competing bid, it would set the stage for a rare takeover battle in Italian banking, pitting two of the country’s largest lenders against each other for control of one of its most strategically important financial institutions.
MPS on Monday evening said its board would evaluate BPM’s letter and Intesa’s unsolicited offer. Depending on MPS’s response, BPM may then have to decide whether to proceed or shelve its proposal, according to people familiar with the discussions.
A battle for MPS threatens to overshadow the comeback of the bank’s chief executive, Lovaglio, who was ousted in a boardroom tussle in March only to be restored by investors in April.
Billionaire investor Francesco Gaetano Caltagirone, who is the second-largest shareholder in MPS, sought to oust Lovaglio and replace him with his close confidant Fabrizio Palermo. But other big shareholders — including Banco BPM — came to Lovaglio’s rescue.
That failed coup may have set the stage for Caltagirone, a skilled political operator in Rome, to lend his support to Intesa’s bid.
Messina said he had not discussed the offer with shareholders before launch. But several people familiar with the matter said the chief executive had been exploring a potential bid for MPS since at least January, holding talks with multiple people in Rome and Milan to discuss the idea and assess its political and financial feasibility.
The start of a fresh round of matchmaking between Italy’s financial institutions will also increase the pressure on the country’s best-known dealmaker to act.
UniCredit’s chief executive Andrea Orcel last year abandoned his bid for BPM following opposition from Meloni’s government. But the shifting sands of Italy’s banking landscape could play into UniCredit’s hands, said one Italian banking adviser.
“UniCredit could come back with an approach for BPM,” the adviser said. “UniCredit is weaker on the Italian side than Intesa, so it could reasonably say that it now wants BPM to boost its scale in Italy.”
Any suggestion that BPM’s largest shareholder, Crédit Agricole, might seek a full takeover could also swing the government behind UniCredit, they added.
“There is a possibility that Crédit Agricole would launch an offer for BPM. So we could even get to a point where the Italian government asks UniCredit to intervene to avoid a French takeover.”
Italy’s biggest banking players have repeatedly denied any interest in pursuing deals — yet they have proved unwilling to stay on the sidelines. The winner may end up being “the best poker player”, the Milanese banking executive said.
Messina for his part claims Intesa’s offer “is very attractive and benefits all shareholders” and could help transform the bank into “the Italian UBS”.
He added: “We never said we didn’t want to grow in Italy, but that antitrust rules prevented it.”