Revival of the Oldest Bank: A Bold Move in Italian Finance
Monte dei Paschi’s CEO, Luigi Lovaglio, has been burning the midnight oil since taking the reins in 2022. His mission: to revive the fortunes of the world’s oldest bank, which was bailed out by Italy’s Treasury just five years prior. Lovaglio’s latest move is a daring one – a 13.3 billion euro all-share takeover bid for Mediobanca, Italy’s historic investment bank.
A New Chapter for MPS
After a series of all-nighters, Lovaglio and his finance chief, Andrea Maffezzoni, launched the bid, which marks a significant turning point for MPS. The bank has cleaned up its balance sheet, thanks to over 10 billion euros in cash injections between 2017 and 2022. With interest rates on the rise, MPS is poised to capitalize on the profit boost and join the consolidation wave sweeping through Italy’s banking sector.
An Unlikely Pair
Analysts are scratching their heads over the proposed union between MPS and Mediobanca, which share little in common beyond two significant shareholders: Delfin, the holding company of late billionaire Leonardo Del Vecchio, and fellow tycoon Francesco Gaetano Caltagirone. International funds have poured into MPS over the past two years, as the Treasury reduced its stake from 68% to 11.7%.
A Complex Web of Interests
The surprise bid has sparked concerns that the deal may be driven by the shareholders’ secret agenda. Delfin and Caltagirone also own stakes in Italian insurer Generali, and have long accused Mediobanca CEO Alberto Nagel of relying too heavily on income from Mediobanca’s stake in Generali. The government, meanwhile, is keen to build a third major banking group in Italy, rivaling Intesa Sanpaolo and UniCredit.
A Sacred Name in Italian Finance
Lovaglio presented Mediobanca as a merger option to Italy’s economy minister back in December 2022, alongside plans for more straightforward tie-ups with peers. The recent emergence of Delfin and Caltagirone as major MPS investors put Mediobanca on the map of potential deals. According to a person involved in the bid’s preparation, Mediobanca’s reputation as a sacred name in Italian finance made it natural to keep any tie-up ambitions secret until they could have a chance of success.
Rome Throws Its Support Behind MPS
The government has thrown its weight behind MPS’s bid, with two people close to the matter suggesting that the Natixis-Generali combination may have played a role in cementing the government’s support for the plan. However, a third person involved in the bid insists that Lovaglio’s reasons for the deal are purely industrial, driven by the need to find MPS a partner and the complementary nature of the two businesses.
A Perfect Fit?
MPS employees are ecstatic about the potential deal, with one senior employee at a Siena branch telling Reuters, “This deal would be so perfect for our franchise.” However, Mediobanca CEO Nagel has so far rebuffed attempts to open a dialogue with MPS and is preparing to fight against the offer. The battle for Mediobanca has only just begun.
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