The world's oldest bank, Monte dei Paschi di Siena, has submitted an offer to take over its larger rival Mediobanca for EUR 13.3 billion, Reuters reported. She added that the proposal was positively received by the authorities, but caused quite a surprise on the market.
Reuters indicated that it was state-backed Monte dei Paschi di Siena joined the wave of consolidation sweeping the Italian banking system, surprising an offer to purchase the investment bank Mediobanca for EUR 13.3 billion.
Bloomberg also wrote that this is a “surprising offer”, and AP noted that this “surprising move could shape the banking system” in Italy.
Monte dei Paschi wants to take over Mediobanca
– Any market initiative aimed at strengthening our banking system is welcome – said the Italian deputy prime minister, quoted by Reuters. Antonio Tajani.
The agency noted that the new reports were received by analysts and investors with much less enthusiasm, and even with surprise. Monte dei Paschi (MPS), which was in crisis a few years ago, was to be privatized.
As Reuters recalled, the Italian government, after spending EUR 5.4 billion to save MPS, hoped that reprivatization would help create a third, strong player in the Italian banking sector.
MPS CEO Lugi Lovaglio, who also managed Pekao Bank in the past, said the offer was “friendly” as it focused on preserving the Mediobanca name for investment banking.
– We have no plans for Mediobanca to disappear. “I don't even have the skills to be the CEO of an investment banking firm,” Lovaglio said.
A person familiar with the matter told Reuters that Mediobanca considered the offer to be previously unagreed but not unexpected.
The Bank of Monte dei Paschi di Siena was founded in 1472ColorMaker/Shutterstock
Taking over a larger rival
The market value of Mediabanca is estimated at EUR 12.7 billion, which is almost EUR 4 billion more compared to Monte dei Paschi, whose capitalization is EUR 9 billion, AP reported.
After the announcement of the takeover proposal for Mediobanca bank, the decline in MPS shares was 7 percent.
CNBC explained that Monte dei Paschi estimates pre-tax benefits of EUR 700 million per year from this transaction, which would help capitalize on tax breaks from previous permanent losses, which would translate into 500 million per year for the next six years.
Reuters reported that the transaction could be finalized by the end of September.
MPS shares have more than tripled in value since November 2022, when Lovaglio made a decisive share issue, financed the layoffs of thousands of workers and boosted profits through cost cuts, Reuters reported.
Bank Monte dei Paschi di Siena was founded in 1472 and is the oldest continuously operating bank in the world.
Reuters, AP, Bloomberg, CNBC
Main photo source: ColorMaker/Shutterstock