Italian mid-sized lender Banco BPM has abandoned its efforts to merge with rival Banca Monte dei Paschi di Siena (MPS) after Credit Agricole, BPM's largest shareholder with a 29.3% stake, rejected the proposed tie-up. Credit Agricole stated that it saw no value in a combination between the two mid-sized banks and expressed a preference for combining its own Italian unit with Banco BPM instead. This decision comes after nearly two months of preliminary consultations initiated by BPM following an invitation of merger talks to MPS.
Monte dei Paschi confirmed that it had taken note of Credit Agricole's position and Banco BPM's subsequent decision to halt discussions. MPS will continue to assess all strategic options to benefit its shareholders, employees, and clients. This development effectively clears the path for Intesa Sanpaolo's unsolicited $35 billion offer for Monte dei Paschi, as the proposed merger with BPM was seen as the main alternative to Intesa's bid. The Italian government, which rescued Monte dei Paschi in 2017, had promoted a merger with BPM to create a third large banking player.
Speculation regarding a BPM-Monte dei Paschi merger had been rife in Italian media, but Olivier Gavalda, CEO of Credit Agricole, dismissed these reports as "completely false" and indicated that it was difficult to envision value in such a deal. He also emphasized that "nothing can be done against us or without us" given Credit Agricole's significant stake in BPM. The breakdown of these talks highlights the ongoing consolidation within the Italian banking sector, with larger banks like Intesa Sanpaolo looking to bolster their market share.
