Published by Global Banking and Finance Review
Posted on August 6, 2025
By Valentina Za
MILAN (Reuters) -Italy's Monte dei Paschi di Siena on Wednesday raised its profit forecast for the year after much higher than expected second-quarter profit and said it was determined to buy bigger rival Mediobanca.
Monte dei Paschi's (MPS) 16 billion euro ($19 billion) all-share buyout offer for Mediobanca, which runs until September 8, is one of a dozen takeover bids reshaping Italian banking.
Capital reserves, which MPS can tap to sweeten its offer, increased sharply in the quarter.
CEO Luigi Lovaglio ruled out the idea of MPS abandoning the bid, given Mediobanca's strong opposition, and reviving instead an earlier project to combine with Banco BPM, which has recently freed itself from UniCredit's grip.
"We're quite determined ... to build the third competitive force in the Italian landscape," Lovaglio told analysts.
BPM said on Tuesday it could look at MPS, of which it already owns 9%, as it weighs tie-up options, but only after the Mediobanca bid concludes.
MPS said net profit in the three months through June totalled 479 million euros ($554 million), compared with a 349 million euro forecast in a company-provided analyst consensus.
At 1.05 billion euros, revenues were up 4% versus the previous quarter, with trading income jumping by a third, net interest income up despite falling rates, and net fees also rising. Analysts had looked for revenues of 982 million.
MPS was rescued by the state in 2017 and has since restructured under Lovaglio.
Like other Italian lenders, it has seen earnings lifted by higher interest rates in recent years, while also benefiting from the release of cash set aside against legal risks after favourable court rulings.
With profits recovering after years of losses, MPS has been able to tap into tax credits to support earnings. It is counting on such a boost to reward Mediobanca's shareholders once it can add the target's income to its own accounts.
MPS said its core capital ratio stood at 19.6% of assets, one of the highest in the industry, which could give it room to improve the Mediobanca bid.
To fight MPS' offer, Mediobanca is attempting to buy private bank Banca Generali and has called a shareholder vote on August 21 on the plan. It had been forced to postpone an earlier vote for fear it would fail to receive sufficient investor support.
($1 = 0.8639 euros)
(Reporting by Valentina Za. Editing by Jan Harvey and Mark Potter)
