Italy's Intesa gets ECB authorisation to take over Monte dei Paschi

Intesa Sanpaolo Receives ECB Approval for Monte dei Paschi €32 Billion Takeover

ECB Approval Marks Major Step in Intesa Sanpaolo’s Takeover of Monte dei Paschi

By Valentina Za

MILAN, Oct 27 (Reuters) - Italy's biggest bank Intesa Sanpaolo said on Tuesday it had received the European Central Bank's authorisation to take control of Monte dei Paschi di Siena, in a major step towards launching its €32 billion ($36 billion) takeover offer.

While widely expected, the ECB's green light represents a key milestone in the approval process for Intesa Sanpaolo's cash-and-share bid.

Next Steps in the Approval Process

Attention now turns to Italy's markets regulator, Consob, which should approve the offer document early next month, followed by the country's antitrust authority, whose decision is expected in the second half of November.

Once Consob approves the offer, Intesa can kick off the tender phase without waiting for the antitrust decision, which investors will still have time to assess before the closure of the period, which runs over several weeks.

Role of the Competition Watchdog

The competition watchdog's ruling could be significant.

To head off any antitrust objections, Intesa has already agreed to sell half of MPS's branches to insurer Unipol which will merge them with those of mid-sized bank BPER.

Intesa may have to sell a few dozen more than envisaged by the Unipol accord, people close to the matter have previously told Reuters.

Rival Italian heavyweight UniCredit has said it is interested in assets coming up for sale as peers merge.

Insurance Market Implications

However, the antitrust authority is also reviewing the situation in relation to the insurance market, where Intesa competes with Assicurazioni Generali in the life business.

By acquiring MPS, which last year bought Generali's top shareholder Mediobanca, Intesa will come to indirectly own 13.4% of Generali.

The ECB on Tuesday also authorised Intesa to take indirect control of Mediobanca.

Potential Remedies and Intesa’s Position

The head of Italy's competition watchdog, Saverio Valentino, said last week the authority may need to impose "behavioural remedies" on Intesa to ensure that the Generali stake remains a purely financial investment.

Intesa has said it does not plan to exert any control over Generali. On Tuesday, CEO Carlo Messina said the bank was keen to protect Generali's independence.

Board Representation and Equity Consolidation

However, Intesa needs board representation to prove it can exert significant influence over the insurer. Such proof is required to book the stake, as Intesa intends to do, using an accounting method known as 'equity consolidation'.

Additional Information

($1 = 0.8925 euros)

(Reporting by Valentina Za, editing by Gavin Jones)