Advisors for Banca Monte dei Paschi di Siena and Banco BPM are currently developing a merger proposal that includes both cash and stock components. This initiative is seen as a direct alternative to the acquisition bid made by Intesa Sanpaolo for Monte dei Paschi. The goal of this proposed merger is to ensure that the ownership structure broadly reflects the current valuations of the two banks, as reported by Bloomberg News. Both Banca Monte dei Paschi di Siena and Banco BPM have declined to comment on these reports.
This proposed merger aims to create Italy's third-largest banking group, a 'merger of equals' that would preserve the identities, historical headquarters, and regional presence of both institutions. The plan includes a cash component for Monte dei Paschi's shareholders, potentially sourced from an extraordinary dividend paid out before the deal's finalization. Monte dei Paschi, which has a market capitalization of $35.3 billion, possesses an excess capital of $3.3 billion (as of late 2025) that could be used for this purpose. Banco BPM currently has a market capitalization of $23.7 billion.
In addition to the cash component, there's speculation that Monte dei Paschi could monetize its 13.3% stake in Generali to further finance the deal. The new combined entity would also boast a strong capital position with a pro forma fully loaded CET1 ratio estimated around 15%. Projected synergies are substantial, exceeding $1.1 billion gross, with over $650 million from cost reductions and more than $450 million from increased revenues. These revenue gains are expected to come from network optimization ($250 million) and product factory improvements ($200 million).
The deal faces several hurdles, including gaining approval from extraordinary shareholder meetings of both banks, with key shareholders like Crédit Agricole, Delfin, and Caltagirone playing crucial roles. Timing is also critical, as Intesa Sanpaolo aims to finalize its offer by the end of the year. The boards of both Monte dei Paschi and Banco BPM are expected to meet before their half-year financial results (scheduled for August 5 and 6) to potentially formalize this joint operation. UBS, Bank of America, Vitale & Associati are advising Monte dei Paschi, while Goldman Sachs and Citi are advising Banco BPM.
