How Italy’s lawmakers swung close to collapse to bid for reputable merchant bank by Reuters
By Valentino Za, Gianluca Semeraro and Mathieu Rosemain
MILAN (REUTERS) – Monte dei Paschi (MPS) chief executive Luigi Lovaglio has pulled off a few hiccups since arriving in Siena in early 2022, when Italy’s treasury picked him to revive the fortunes of the world’s oldest bank, five years after he banned .
Back in October 2022, he worked through the night to pull off the sale of shares, as the seventh call for MPS in 14 years caused a last-minute panic among the banks that submitted it. The representatives fought for the sale of shares at 2 euros.
MPs traded at 7 euros this week as Lovaglio and his finance chief Andrea Maffezzoni emerged from two sabbaticals that ended in them launching a 13.3 billion euro ($14 billion) takeover bid for all of its rival (OTC :), Italy’s historic investment bank.
More than 10 billion euros in cash between 2017 and 2022 allowed lawmakers to clean up their balance sheet in time for the bank to take a profit boost from higher rates and jump on a consolidation race through the Italian sector.
The lawmakers, who once threatened to spread contagion throughout the industry, are bidding for a bank that has crowded the Italian financial arena for decades.
Lovaglio, 69, appeared aware of his bold move and tried to strike a conciliatory tone on Friday.
“We don’t want to take any action that could somehow weaken a strong organization like Mediobanca,” he told analysts.
An odd couple
Analysts fit the “Odd Pair” of Mediobance and MPS, they shared more than two significant shareholders: Delfin, the holding company of the late billionaire Leonardo del Vecchio and fellow Tycoon Francesco Gaetano Caltagirone.
International funds have piled up for MPS in the last two years, while the treasury has reduced its share to 11.7% from 68%. The surprise offer sparked a sell-off, with the dealership’s shares closing up 7%.
A person involved in the deal said advisers UBS and JPMorgan would work to explain the deal to investors and dispel concerns that it could only reflect a hidden shareholder agenda.
Delfin and Caltagirone also own stakes in Italian insurer Generali (to be :), and for years have accused Mediobanca CEO Alberto Nagel of over-reliance on income from Mediobanca’s stake in Generali.
Delfin and Caltagirone this week opposed a tie-up of asset manager Generali with France’s Natixis investment managers.
They have found an ally in the government, which is worried about savings moving outside of Italy.
At the same time, the government’s determination to help build the third largest banking group in Italy to rival Intesa Sanpaolo (OTC 🙂 and Unicredit strengthened.
Rome thought it was headed in the right direction when it sold shares in dealerships to Banco BPM, Italy’s third-largest lender, as well as Delfino and Caltagirone in November.
But late last year, Unicredit made a surprise bid for Banco BPM, thwarting the Treasury’s efforts to push, with the help of Delfino and Caltagirone, a tie-up between MPS and BPM.
Holy
Lovaglio said on Friday that in December 2022 he presented Mediobanca as an MP merger possibility to Italy’s economy minister, along with plans for larger peer-to-peer mergers.
Since then, it has become widely known that mid-sized rivals Banco BPM and BPER are potential candidates for MPS.
Only the recent appearance of Delfin and Caltagirone as the main representatives of investors put Mediobanca on the map of potential contracts.
A person involved in preparing the bid said that Mediobanca was “such a hallowed name” in Italian finance that it was natural to keep any ambitions under wraps until they could have a chance of success.
Rome threw its support behind MPS’ bid for Mediobanca on Friday, with two people close to the matter saying the Natixis-Generali combination may have played a role in cementing government support for the plan.
A third person involved in the bid, however, said Lovaglio’s reasons for the deal were purely industrial and based on the need to find a representative partner and how complementary the two companies could be.
“Other than that, we are,” a senior employee of the dealership at the Siena branch told Reuters on condition of anonymity. “This business would be so perfect for our franchise.”
So far, however, Mediobance CEO Nagel has rebuffed attempts to open dialogue with MPS and is preparing to fight the bid, two people with knowledge of the matter said.
Mediobanca did not comment on the offer.
($ 1 = 0.9541 euros)
