Italy’s antitrust regulator has started a formal review of Intesa Sanpaolo’s proposed takeover of Monte dei Paschi di Siena (MPS), examining whether the deal could affect competition across banking and insurance markets both locally and nationally.
The investigation is intended to assess possible effects of the transaction “on competition dynamics in numerous banking and insurance markets at the local and national level.”
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In June, Intesa submitted a cash-and-share bid valued at €30.6bn ($35bn) for MPS, after Banco BPM had pursued a merger of equals with the Tuscan lender.
Banco BPM abandoned that effort after resistance from its biggest shareholder, Crédit Agricole.
In an attempt to address competition concerns in banking, Intesa had already agreed to sell half of MPS’s branch network.
Even so, the regulator early findings suggested the takeover could still create competition concerns in 20 Italian provinces in the market for deposits and in 17 provinces in lending to small businesses, according to a Reuters report based on the Italian-language document.
The watchdog had already carried out an initial review after Intesa sought clearance for the offer in June.
That earlier assessment also pointed to possible issues in 72 provinces in household lending.
If completed, Intesa’s €35bn cash-and-stock offer for MPS would also give it a 13% holding in Generali, the country’s largest insurer.
Intesa and Generali compete in life insurance.
Intesa said it does not intend to influence Generali’s management, though it wants to benefit from capital relief rules linked to its stake, the news agency added.
For that, it would need representation on the insurer’s board.
The regulator said there was a possibility that Intesa’s “incentive to compete aggressively against Generali would be significantly weakened” if the merger were completed.
“The existence of (a) structural and governance link … could make coordination between the two institutions easier, as well as increase the incentive to engage in coordinated conduct,” the regulator was quoted by Reuters.
Because of Intesa’s expected role in Generali’s governance, the watchdog added that its review “will also consider potential competition concerns arising from the risk of sensitive information being exchanged between the two competitors.”
In August, MPS outlined plans for two separate share-based bids for Banco BPM and Banca Generali worth a combined €34bn ($40bn), as it seeks to avoid being acquired by Intesa Sanpaolo.
The proposed offer for Banco BPM values that bank at €25.3bn, while the bid for Banca Generali values it at €8.7bn.
