Banco BPM has stopped pursuing a combination with Banca Monte dei Paschi di Siena after opposition from its largest shareholder, Crédit Agricole, undermined the effort.
The French banking group, which owns 29.3% of Banco BPM’s share capital, said it did not see merit in combining the two Italian lenders and would rather pursue a transaction between Banco BPM and its own operations in Italy.
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Banco BPM board had resolved to end contacts with Monte dei Paschi on a possible merger because there had been no concrete progress since it first proposed discussions.
Monte dei Paschi had acknowledged the stance taken by both BPM and Crédit Agricole and had agreed to close the preliminary exchanges, which it regarded as a necessary step before any formal negotiations.
The bank would keep reviewing possible paths in the interests of shareholders, staff and customers.
Last month, Intesa Sanpaolo launched an unsolicited €35bn approach for Monte dei Paschi.
Just hours before Intesa revealed its bid in June, Banco BPM had invited Monte dei Paschi to open merger discussions.
Monte dei Paschi has described Intesa’s proposal as inadequate, while stopping short of formally turning it down, and said it would examine every available alternative, including Banco BPM’s approach.
Italian media had in recent days fuelled expectations of a near-term announcement on a Banco BPM-Monte dei Paschi deal.
However, Crédit Agricole chief executive Olivier Gavalda rejected those reports as “completely false” and said it was difficult to identify value in a transaction between the two banks.
A person familiar with Monte dei Paschi’s defence planning told Reuters that any alternative to Intesa’s proposal would need to deliver greater value for shareholders, with the €3bn cash element in Intesa’s offer serving as a reference point.
Monte dei Paschi was bailed out by the Italian state in 2017.
According to Bloomberg citing La Stampa that Italy intends to sell its remaining holding in Banca Monte dei Paschi di Siena by the end of September, before Intesa Sanpaolo takeover attempt reaches a key stage.
The Finance Ministry still owns 4.9% of Monte dei Paschi and wants to remain neutral so as not to suggest it is backing either side in the bid, the newspaper said, citing an unnamed ministry official.
Separately, the Financial Times reported that Monte dei Paschi is studying other ways to resist Intesa Sanpaolo’s hostile bid, including a possible bid for Banco BPM, after negotiations over a “merger of equals” between the two smaller lenders broke down on Friday.
According to people familiar with the matter, Monte dei Paschi chief executive Luigi Lovaglio is considering an acquisition of Banco BPM, a transaction he has supported for some time.
Those people said Lovaglio was weighing an approach to Banco BPM’s biggest shareholder, Crédit Agricole.
No contact had taken place over the weekend, however, and any such deal would not go ahead if the French group’s management chose not to participate.
