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Headlines

Italy government backs Monte Paschi's bid for Mediobanca

Published by Global Banking and Finance Review

Posted on January 24, 2025

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ROME (Reuters) - Italy's government supports Banca Monte dei Paschi's (MPS) bid for merchant bank Mediobanca as the proposed deal may strengthen the country's banking system.

"We stand for the free market. Any market initiative aimed at strengthening our banking system, which is already healthy, is welcome," said Foreign Minister and Deputy Prime Minister Antonio Tajani, who also leads the Forza Italia party.

The 13.3 billion euro ($13.97 billion) all-share offer comes after a year in which the Italian Treasury sharply cut its stake in formerly bailed-out MPS, lining it up for an M&A deal and a return to the private sector.

Sources familiar with the matter said Prime Minister Giorgia Meloni's administration sees the proposed MPS-Mediobanca tie-up as very positive, as it would create a strong banking player without leading to job losses or branch closures.

MPS Chief Executive Luigi Lovaglio told an analyst call on Friday he had first discussed the possibility of such a deal with the economy ministry in late 2022 - signalling he had the Rome government's blessing over the transaction.

"I met our economy minister [on Dec. 16, 2022] for an update on strategic options for the future: a stand-alone one, a merger of equals and, as a third option, a transformational transaction with Mediobanca," Lovaglio said.

"And now it is the right moment and there are all the conditions for capturing that third option, which is the best one in this competitive landscape," he added.

Tajani also said it was important to carry on with the full privatisation of MPS. The government still owns an 11.7% share in the Tuscan lender, from an initial 68% it took after a 2017 state rescue.

($1 = 0.9519 euros)

(Reporting by Angelo Amante, Valentina Za and Giuseppe Fonte; Editing by Alvise Armellini and Louise Heavens)