Intesa Sanpaolo's MPS Acquisition to Transform Italian Banking Sector
Overview and Analysis of the Intesa-MPS Deal
By Valentina Za
MILAN, Oct 5 (Reuters) - Italy's Intesa Sanpaolo has sweetened its €34 billion ($38 billion) share-and-cash bid for Monte dei Paschi di Siena and won the backing of its target's main investor.
But the bid by Italy's largest lender for the country's biggest mid-sized bank has stirred competition concerns after two years of sector consolidation.
The next hurdle for Intesa is a decision by Italy's antitrust authority, which a person close to the matter said is due between the middle and end of November.
Here's a look in four charts at the competitive structure of the euro zone's fourth-largest banking market.
Antitrust Hurdle and Regulatory Challenges
Expected Clearance and Conditions
ANTITRUST HURDLE
Italy's antitrust body is expected to eventually clear Intesa's acquisition of MPS with conditions. The authority, which last month opened an in-depth probe into the deal, declined to comment.
Branch Divestments and Compliance Measures
Intesa has already agreed to sell half of MPS' branches, echoing a scheme it used in a 2020 deal that turned it into Italy's biggest bank.
Of the 635 MPS branches it will sell, Intesa has irrevocably selected 445, while it can make changes to another 190 to help with any further antitrust problems.
Intesa could have to sell more branches than planned, two people close to the matter said, with one saying it may have to shed up to 50 more.
Impact on Insurance Holdings
Antitrust measures could also affect the stake in insurer Generali that Intesa will gain through MPS, the people said.
Market Fragmentation and Sector Consolidation
Reduction in Fragmentation
HOW FRAGMENTED IS ITALIAN BANKING?
Italy has sharply reduced banking fragmentation.
A bad loan crisis led to rescue deals, including a government-funded sale of two banks to Intesa in 2017, and a reform forced cooperative lenders to merge.
Germany has seen a much smaller rise in the ECB concentration index.
Recent Consolidation Activity
Italy's latest consolidation round has seen roughly a dozen deal proposals surface since late 2024, of which half went through.
The completion of MPS' reprivatisation in November 2024, after a 2017 bailout, kickstarted the process. It was expected to bring together other second-tier players: Banco BPM and BPER.
But UniCredit upended a prospective MPS-BPM tie-up and forced MPS to pursue merchant bank Mediobanca instead.
Competitive Positioning Among Italian Banks
The deal restored MPS to third place among Italian banks, but with less than a third of Intesa's assets.
To fight off Intesa, MPS CEO Luigi Lovaglio proposed buying both BPM and wealth manager Banca Generali, but the chances of shareholder approval for his scheme have dwindled after the top MPS investor on Sunday sided with Intesa.
Future Outlook for Italian Banking
Potential Market Leaders
WHAT NEXT?
Under Intesa's plan, Unipol-owned BPER will surge to third place in Italian banking by adding 635 MPS branches.
That would leave a very significant size gap between Italy's top two banks and the country's third largest.
BPM could claim the No.3 spot if a merger with the Italian arm of France's Credit Agricole (CA), its main shareholder and a supporter of the deal, goes through.
Increasing Market Concentration
But it would still be a distant third to Intesa and UniCredit, while increasing concentration measured as the proportion of assets held by the top five banks.
This would rise further if UniCredit pursues plans to buy any assets others have to shed for antitrust purposes.
Implications for Bank Rates and Consumers
Profit Margins and Rate Dynamics
IMPLICATIONS FOR BANK RATES
Concentration is good for profit margins, with Spanish and Italian banks gaining from the 2022-2024 rate-hiking cycle more than German and French rivals because they managed to pass higher rates on to borrowers more quickly than to savers.
Consumer Behavior in Deposit Markets
French and German households were quicker to move their money into higher-yielding time deposits, while sight deposits remained predominant in Italy and Spain.
($1 = 0.8935 euros)
(Reporting by Valentina Za in Milan; Additional reporting by Silvia Ognibene in Florence; Editing by Tommy Reggiori Wilkes and Alexander Smith)