The board of directors of Banco Bpm «has unanimously resolved to send Banca Monte dei Paschi di Siena» a communication to represent «its interest in initiating a dialogue aimed at discussing and agreeing on a potential merger operation agreed between the two institutions». This is stated in a note from Banco Bpm. The operation, explains the credit institution, would be «structured according to the typical modalities of a merger of equals» and «would allow the creation of a new banking and financial group, capable of competing, in terms of size, product excellence and potential economies of scale, with the main national and European banking and financial operators, while preserving the strengths and specificities of the two entities». The operation, according to Banco Bpm, «would fit into the ongoing Mediobanca integration process in an efficient and complementary manner, allowing for coordinated and contextual development of the product factories involved and strengthening their industrial contribution within the new group». In line with this approach, the merger «would be based on a governance structure founded on criteria of balance and representativeness, aimed at reflecting the contribution and specificities of the two banks and ensuring adequate involvement in key decision-making processes, as well as safeguarding historical headquarters and the connection with the reference territories». The combination of Banco Bpm and Mps «would lead to a Group market capitalization exceeding 50 billion euros, strengthening its position in the capital market».
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Synergies for over 1.1 billion per year
The merger operation proposed by Banco Bpm to Banca Monte Paschi di Siena has a «significant synergistic potential at full capacity exceeding 1.1 billion euros before taxes, of which over 650 million in cost synergies and over 450 million in revenue synergies, in turn generated by approximately 250 million from higher network revenues and approximately 200 million from the optimization of product factories». This is calculated by Banco Bpm, highlighting the «clear strategic rationale» of the operation. Among other elements that Banco Bpm highlights as strategic for a potential merger with Mps, the «creation of a new national champion, the second largest domestic banking operator by size, capable of facing the new challenges dictated by the evolution of the banking market and supporting the country’s growth» also stands out. Furthermore, «geographical integration with complete coverage across the national territory, with a strong presence in Italian regions with greater potential (in particular, the leading operator by number of branches in Lombardy, Tuscany, and Veneto) and a strengthening of competitive positioning also in various regions of Central and Southern Italy» in addition to «industrial complementarity of product factories and high upside deriving from their possible optimization, with reference both to activities historically outsourced by MPS and recently internalized by Banco Bpm, and to complementary product factories contributed by the Mps-Mediobanca hub». Further benefits would also come «from the participation in Assicurazioni Generali, whose decisive relevance would allow for expanding the scope of strategic options available to the Group, in the interest of the shareholders of all entities and their respective stakeholders», the group reports. The operation, Banco Bpm emphasizes, «would also present significant financial attractiveness for all shareholders, who would benefit from a capital position at the top of the sector, with a proforma fully loaded CET1 ratio of approximately 15%, without considering the further potential benefits deriving – following the relevant regulatory and supervisory checks – from the possible extension of the so-called Danish Compromise to the participation in Generali». Furthermore, it would create «value equal to at least 5.5 billion euros, valuing the synergies indicated above net of integration costs, estimated at approximately 1.1 billion before taxes» and «a potential generation of net profit at full capacity equal to approximately 6 billion, with double-digit earnings per share growth, supporting significant distribution capacity, higher than that currently foreseen in the two stand-alone plans, and strong organic capital generation».
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The proposal on Mps’s table
Tomorrow, the Banco Bpm merger proposal is also expected to be on the table of the Mps Board of Directors, which is already scheduled. AdnKronos learns this from financial sources. The directors will thus be able to make an initial assessment. The first contacts, although in an embryonic state, between Monte dei Paschi di Siena and Banco Bpm – as anticipated by the news agency – date back to the weeks immediately following the Mps shareholders’ meeting. The CEO of Mps, Luigi Lovaglio, however, stated in recent days that he is «fully focused» on the Mediobanca integration project. No comment from Banca Monte dei Paschi di Siena, pending the meeting of the bank’s Board of Directors.
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