Italy prioritises MPS-BPM merger to reduce stake in MPS – report

Core Viewpoint - Italy is prioritizing a potential merger between Monte dei Paschi di Siena (MPS) and Banco BPM to reduce its shareholding in MPS, while retaining a 4.9% stake in MPS as it integrates Mediobanca [1][2]. Group 1: Government Actions and Stakeholding - The Italian government originally acquired a 68% stake in MPS following a bailout in 2017 and has since reduced its share through various placements [1]. - Italy's current shareholding in MPS meets the re-privatization commitments set by the European Commission as part of the bailout process [2]. Group 2: Merger Considerations - Despite previous setbacks, the government continues to pursue a merger between MPS and Banco BPM [2]. - Banco BPM's CEO indicated that BPM is considering two merger options: MPS and Credit Agricole [3]. - Credit Agricole holds a 20.1% stake in Banco BPM and is its largest investor, which influences future strategic decisions [3][4]. Group 3: Integration and Future Plans - MPS is currently focused on integrating Mediobanca, but the Treasury is prepared to support a merger with Banco BPM once this integration is complete [4]. - Credit Agricole has engaged Deutsche Bank and Rothschild as advisers for a potential merger of its Italian operations with Banco BPM, although structuring a satisfactory deal remains challenging [5].