September 11, 2024, was a milestone for German finance. The announcement that UniCredit was to acquire a 9% stake in Commerzbank, one of the two flagships of German finance, sent shockwaves through Germany. An Italian bank, which ran into serious difficulties ten years ago during the eurozone crisis, now wants to take over Germany's second-largest bank. Italian banks are currently in excellent financial health, thanks in particular to the high interest rates that provide them with substantial revenues and profits. In a country where the banking landscape remains highly fragmented, the time is ripe for consolidation, unless the Italian government or the European Central Bank (ECB) decide otherwise.
I. The European banking framework and Italy's specific challenges
1. The current state of Europe's banking sector
On September 30, 2024, ECB President Christine Lagarde stressed the need for cross-border mergers to strengthen the European banking sector and reduce financial fragmentation. Speaking at a conference on financial stability, she said, "Cross-border mergers are desirable to reduce the risks associated with fragmentation and strengthen the resilience of the European banking sector."
The ECB has long advocated consolidation, arguing that European banks need to grow to face global competition from American and Chinese financial giants. However, despite these calls, cross-border bank mergers remain rare, largely due to regulatory and political obstacles. Many European governments remain cautious on the subject, not least for fear of excessive concentration in the banking market and the difficulties they could face if one of Europe's major banks were to fail.
Emmanuel Macron's vision diverges somewhat from this caution. In an interview with Bloomberg on May 14, 2024, he echoed Ms. Lagarde's call for the creation of "European banking champions". In his view, this approach would reduce the dependence of EU countries on foreign financial institutions. However, such cross-border operations remain difficult to implement. The most recent examples date back to before the 2008 financial crisis, with Santander's acquisition of the British bank Abbey National in 2004, UniCredit's takeover of HypoVereinsbank in 2005 and BNP Paribas' acquisition of the Italian bank Banca Nazionale del Lavoro in February 2006.
The fact that European states had already had to bail out their national banks was extremely unpopular. So, if a government had to participate in the bailout of a foreign bank operating on its territory, it would be even more unpopular with the public. Another structural problem in Europe lies in regulatory barriers: each EU member state has a different tax system, insolvency laws and banking regulations, making cross-border mergers complex and costly. As a result, the European banking market remains deeply fragmented, with many banks focusing primarily on their home markets.
2. The banking situation in Italy
The Italian banking landscape can be divided into three main categories:
1. Italy boasts two major banks with a national and international presence:
Intesa Sanpaolo (ISP), with assets of €949 billion, is Italy's largest bank and one of Europe's most stable financial institutions. Created from the 2007 merger of Banca Intesa and Sanpaolo IMI, it dominates Italy's retail banking sector and has a strong footprint in wealth management and insurance.
Its main competitor, UniCredit (UCG), is Italy's second-largest bank, with assets of €803.5 billion (Q3 2024). Founded in 1998 following the merger of several Italian banks, it has become a leading pan-European institution, with a strong presence in Italy, Germany, Austria and Central and Eastern Europe.
2. Italy boasts many banks operating in several regions, mainly specializing in SME financing, local economic development and municipal financing. Among the most important institutions are:
Banco BPM (BAMI), Italy's third largest bank, created in 2017 following the merger of Banco Popolare and Banca Popolare di Milano. With a strong regional presence and diversified portfolio, it plays a key role in corporate financing and asset management.
Monte dei Paschi di Siena (BMPS), founded in 1472, is the world's oldest active bank. Once a prestigious institution, it ran into serious difficulties during the eurozone crisis, necessitating several state rescues, including a partial nationalization in 2017. Between 2008 and 2022, it carried out seven capital increases totalling €25 billion. Under pressure from the ECB, the Italian state is gradually reducing its stake, which currently stands at 11.4%.
BPER Banca (BPE) is one of Italy's leading regional banks, with a strong focus on retail banking and SME financing. Thanks to several acquisitions in recent years, it has established itself as a key player in Italy's banking consolidation. Its largest shareholder, Unipol (24%), plays a strategic role in its expansion, particularly with the planned merger with Banca Popolare di Sondrio
Banca Popolare di Sondrio (BPSO), founded in 1871, is a historic cooperative institution in northern Italy, focusing primarily on local banking services and local authority financing. Its strong regional positioning and independence have long set it apart in the Italian banking landscape. However, with Unipol holding 19.7% of its capital, it has become a priority target for integration into a larger banking group.
3. Italy also has a large investment bank and two large insurance companies:
Mediobanca (MB), founded in 1946, is a prestigious Italian investment bank, historically considered the financial engine of post-war industrial development. Specializing in corporate finance, investment banking and wealth management, it owns 13% of Generali, Italy's largest insurer.
Assicurazioni Generali (G), with a market capitalization of around 49 billion euros, is Italy's leading insurer and a key player in European financial services.
Unipol Gruppo S.p.A. (UNI), Italy's second largest insurance group, is a major player in motor, home and health insurance. It owns 24% of BPER Banca and 19.7% of Banca Popolare di Sondrio, giving it a strategic role in the Italian banking sector.
3. Challenges and specificities of the Italian banking sector
What sets Italy apart from other European countries is the central role played by banking foundations in its financial system. Born of the Amato-Carli reform of 1990, these not-for-profit institutions were designed to separate the banks' commercial activities from their philanthropic vocation. However, despite their autonomy, these foundations remain influential shareholders within major banks such as Intesa Sanpaolo or Unipol, retaining significant power over bank governance. This Italian peculiarity has several implications. On the one hand, it offers shareholder stability, protecting the big banks from hostile takeovers and limiting the risk of capital fragmentation. On the other hand, it slows down the consolidation dynamic, as these foundations, often reluctant to see their influence diminish, may oppose mergers that would dilute their shareholding.
Despite consolidation efforts, the Italian banking sector continues to face a number of structural challenges, including the legacy of non-performing loans (NPLs), the digital transition and the country's economic volatility. These obstacles continue to hamper the development and competitiveness of Italian banks. Ultimately, although the current wave of mergers and acquisitions aims to stabilize and modernize the Italian banking system, it also represents an attempt to turn the page once and for all on the crises of the last decade.
II. The UniCredit-Commerzbank merger: a major upheaval for Europe
1. UniCredit's rise in Commerzbank
On September 11, 2024, UniCredit announced that it had acquired a 9% stake in Commerzbank (CBK), marking a significant entry into the German banking market. The transaction included the purchase of 4.5% of the shares held by the German government, at a price of €13.20 per share, for a total consideration of around €700 million. UniCredit justified the acquisition by pointing to the strength of the German banking market and the potential synergies between the two institutions. Andrea Orcel, CEO of UniCredit, said: "Expanding our presence in Germany is a logical step for UniCredit as we seek to strengthen our European influence and better serve our customers."
On September 23, UniCredit announced that its total exposure to Commerzbank had reached 21%, rising to 28% by December 18. This stake comprised 9.5% in direct shares and 18.5% via derivatives. Faced with this increase in power, UniCredit has officially requested authorization from the ECB to exceed a direct stake of 9.9% in Commerzbank, as any conversion of derivatives into shares would require ECB validation. A decision is expected within three months, potentially by mid-March.
2. Political and market reactions
On September 23, German Chancellor Olaf Scholz reacted strongly, calling UniCredit's move "an uncoordinated and hostile attack on a key German financial institution". German Finance Minister Christian Lindner also voiced his concerns, claiming that the transaction "does not serve Germany's financial stability interests". The German political class was taken by surprise, as Italy is often perceived as a secondary financial player to Germany. In German business circles, the idea of an Italian bank setting up in Germany, rather than the other way around, seemed inconceivable. This perception was widely echoed by the Italian financial media, which emphasized the irony of the situation.
However, this reaction is paradoxical, as it was the German state itself that originally sold the 4.5% stake to UniCredit in September 2024. The German government still owns 12,1% of Commerzbank, which means that any full merger would require its approval. On the other hand, German trade unions and Commerzbank employees have strongly opposed the deal, fearing 15,000 job cuts, like the UniCredit-HypoVereinsbank merger in 2005, which resulted in a two-thirds reduction in the workforce.
On October 1, 2024, Bettina Orlopp, Commerzbank's new CEO, reaffirmed the bank's determination to remain independent, stating that UniCredit's involvement was not welcome. On January 13, 2025, Jens Weidmann, Chairman of Commerzbank's Supervisory Board, added that an amicable merger with UniCredit was unlikely. The hostility escalated further on January 22, 2025, when Commerzbank officially described UniCredit's initiative as "hostile". For its part, the Italian government officially remained neutral, arguing that it was a transaction between private players. However, according to sources close to the matter, Rome was unhappy with the timing of the operation, preferring to prepare the diplomatic ground before launching such an aggressive expansion, according to the Financial Times.
3. Andrea Orcel: the architect of UniCredit's expansion
UniCredit's offensive in Germany is directly linked to the strategic vision of its CEO, Andrea Orcel, a renowned investment banker renowned for his bold M&A strategies. A former senior executive at Merrill Lynch and UBS, he has played a key role in several major financial transactions in Europe, including advising Royal Bank of Scotland on the acquisition of ABN Amro in 2007 and helping to create UniCredit in 1998. His talent for orchestrating mega-mergers has earned him the nickname "the Ronaldo of investment banking".
Since his appointment as head of UniCredit in 2021, Orcel has transformed the bank, making it one of Europe's most successful institutions. He has long advocated a more integrated European banking sector, declaring in an interview with the Financial Times:"Europe needs banking champions capable of financing its industries and competing on a global scale." In his view, Commerzbank represents a major strategic step towards the transformation of UniCredit into a leading pan-European institution and a major player in the European financial landscape. For the moment, his strategy seems to be paying off, because as the graph below shows, UniCredit has completely outperformed its European competitors since Andrea Orcel's arrival in April 2021.
4. Strategic benefits and risks of the merger
Despite fierce opposition, a UniCredit-Commerzbank merger would offer several strategic and financial advantages. Firstly, it would make UniCredit the second-largest lender in Germany, a profitable and historically stable banking market. Secondly, cost savings could reach €1.5 billion a year, according to analysts, thanks to infrastructure integration and cost optimization. Synergies could be created between Commerzbank and UniCredit Bank GmbH, the former HypoVereinsbank, which could lead to the rationalization of the branch network. The merger would position the combined entity among Europe's largest banking groups, enabling it to compete more effectively with Deutsche Bank, BNP Paribas and Santander. UniCredit would thus become the European bank with the greatest expansion outside its home country, giving it the credibility it needs for future acquisitions in Europe, provided the integration of Commerzbank is successful.
However, several major risks could jeopardize the operation. One of the main ones is job cuts, with German trade unions estimating that up to 15,000 jobs could be lost. In addition, regulatory and political obstacles remain: if the ECB refuses UniCredit's request to increase its stake beyond 9.9%, the deal could be cancelled. The German general elections, scheduled for late February 2025, will also play a key role in the fate of this merger. Friedrich Merz, the CDU candidate and election favourite, has strongly opposed the acquisition, making political approval uncertain. Finally, since UniCredit's initial stake, Commerzbank's share price has risen by 50%, which would make a full takeover much more expensive than expected. However, this rise could also provide an exit route for UniCredit, which could resell its stake without major losses should the deal fail.
III. The UniCredit-Banco BPM merger: a strategic battle for control of the Italian banking sector
1. Context and strategic challenges of UniCredit's offer for Banco BPM
The Italian banking sector is undergoing an unprecedented wave of consolidation, driven by economic imperatives, political pressure and the need to strengthen the competitiveness of Italian banks vis-à-vis their European counterparts. Against this backdrop, UniCredit launched a €10.1 billion takeover bid for Banco BPM on November 25, 2024, targeting the country's third-largest bank.
UniCredit's strategic objectives are based on two key factors:
Strengthen its position in the Italian market, increasing its market share from 10% to 15% and becoming the country's leading retail bank, ahead of Intesa Sanpaolo, which holds 949 billion euros in assets (Q3 2024) compared with UniCredit's projected 1,000 billion after the merger.
Generate significant cost synergies, particularly in retail banking, with annual pre-tax savings of €1.2 billion, according to UniCredit CEO Andrea Orcel.
2. An offer immediately rejected by Banco BPM and Crédit Agricole
As soon as it was announced, UniCredit's offer of €6.66 per share, representing a minimum premium of 0.5% over Banco BPM's last share price, was widely criticized as inadequate. On November 26, 2024, Banco BPM's Board of Directors officially rejected the offer, calling it "predatory and inadequate", arguing that it undervalued the bank and threatened its strategic independence. The main obstacle to UniCredit's acquisition attempt comes from Crédit Agricole (ACA), which has gradually increased its stake in Banco BPM. As Banco BPM's largest shareholder with 15.1% of the capital, Crédit Agricole has a major influence on any takeover attempt. On December 6, 2024, Crédit Agricole announced its intention to increase its stake to 19.9%, subject to the approval of the Italian authorities and the ECB. Officially, the French bank denies any intention of a full takeover of Banco BPM, but its growing influence prevents UniCredit from acting unilaterally.
3. The acquisition of Anima Holding: UniCredit's real objective?
One of the most controversial aspects of UniCredit's bid for Banco BPM is its timing, which coincides with another highly strategic transaction: Banco BPM's acquisition of Anima Holding. Anima Holding is a major player in the Italian asset management sector, with 202 billion euros in assets under management. On November 6, 2024, Banco BPM officially launched a takeover bid for Anima Holding, Italy's largest independent asset manager, in which it already held a 22.4% stake. The aim was to take full control of Anima, delist it from the stock exchange and secure its asset management activities, a fast-growing sector in Italy and Europe. Banco BPM would emerge much stronger from an acquisition of Amina, especially in the current context where asset management is very much in vogue and all European banks want to expand in this sector.
However, 19 days later, on November 25, UniCredit announced its takeover bid for Banco BPM, immediately raising suspicions among Banco BPM executives. Several bank executives suggested that UniCredit's real objective was not Banco BPM itself, but rather to prevent its takeover of Anima. This theory is based on a key element of Italian financial regulation, known as the passivity rule. Under Italian law, when a company is subject to a takeover bid, it cannot acquire new shares or increase its stake in other companies for six months. This measure is designed to prevent target companies from adopting defensive strategies that could distort the takeover process underway. In other words, by launching a takeover bid for Banco BPM, UniCredit is effectively preventing the bank from finalizing its acquisition of Anima Holding. Moreover, this action also prevents Banco BPM from buying additional shares in Monte dei Paschi di Siena (MPS), which the Italian state was planning to sell to Banco BPM as part of its strategy to merge the two banks to create Italy's third-largest banking group.
So, the timing of UniCredit's bid raises a fundamental question: does Andrea Orcel really want to acquire Banco BPM, or is he simply seeking to weaken the bank by preventing it from strengthening through Anima? If UniCredit blocks Banco BPM's acquisition of Anima but its takeover bid fails, Banco BPM could become vulnerable to another takeover attempt in the future. The low premium offered by UniCredit reinforces this hypothesis, as it prevents Banco BPM from seeing its share price artificially inflated. However, with Banco BPM shares trading at around €9.04, 36% higher than the price offered by UniCredit, this strategy seems to be failing for the time being.
4. The Italian government's opposition to UniCredit's offer
The Italian government is firmly opposed to UniCredit's takeover bid for Banco BPM, preferring the creation of a third national banking giant via a Banco BPM-MPS merger. Deputy Prime Minister Matteo Salvini explicitly rejected the offer, declaring: "UniCredit is no longer an Italian bank; its main shareholders are foreign. We must protect our national banking sector." Another area of concern for the Italian government is employment. By announcing 1.2 billion euros in cost synergies, Andrea Orcel has stoked fears of massive job cuts at Banco BPM, a situation the government is seeking to avoid at all costs. To counter UniCredit's takeover bid, the Italian government could invoke the Golden Power law, which allows it to block foreign acquisitions of strategic assets. However, such a move would be unprecedented, as Golden Power was designed to regulate foreign investment in key sectors, not to interfere with domestic bank mergers.
5. The real winner of this battle could be Germany
Faced with growing opposition and regulatory uncertainty, Andrea Orcel announced a pause in the attempted takeover of Commerzbank, Germany's second largest bank. He even hinted that the deal might not go ahead, describing UniCredit's stake in Commerzbank as an "investment" rather than the start of a full acquisition. The investment has so far proved highly profitable, with Commerzbank's share price having risen by 50% since UniCredit announced its stake on September 11, 2024.
However, if UniCredit eventually abandons its bid for Commerzbank or sells its stake, the German government will have succeeded in blocking a foreign acquisition of one of its major financial institutions, without even having to take formal legal steps. Ultimately, Germany will have preserved its national banking interests while avoiding any political controversy, marking a discreet but significant victory for Berlin.
IV. The battle for Mediobanca: Monte dei Paschi di Siena's unlikely takeover bid
1. An unexpected and controversial takeover bid
In an Italian banking sector in the throes of consolidation, with UniCredit leading the offensive, a new player has entered the scene. On January 24, 2025, Banca Monte dei Paschi di Siena (MPS), long perceived as a financial burden on the Italian state, launched a hostile takeover bid for Mediobanca, one of Italy's most prestigious financial institutions, for 13.3 billion euros in shares. This operation would create an extremely heterogeneous entity, which took many observers by surprise. Indeed, the business models of the two banks have almost nothing in common, fuelling speculation that this move would not be aimed at generating synergies to improve profitability, but would have a totally different objective.
2. Two banks with contrasting profiles: MPS versus Mediobanca
Founded in Siena in 1472, Banca Monte dei Paschi di Siena (MPS) is the oldest bank still in operation in the world. A historic symbol of Italian finance, it is a source of national pride for many Italians. However, since the financial crisis of 2008, MPS has undergone a series of chaotic restructurings, marked by poor management, excessive exposure to non-performing loans and risky investments, including the acquisition of Banca Antonveneta for 9 billion euros in November 2007.
The bank was then hit hard by the subprime crisis and the eurozone debt crisis. Between 2008 and 2022, MPS carried out seven successive capital increases, totalling around €25 billion, without ever managing to fully restore its financial stability. In 2017, threatened with bankruptcy, the Italian state intervened by injecting 5.4 billion euros, acquiring 64.23% of the bank's capital. This rescue was accompanied by a strict restructuring plan under the supervision of the European Commission, which imposed branch closures, staff cuts and improved profitability. In 2024, after several share sales, the Italian state's stake was reduced to 11.73 %, but the government still retained a major influence on MPS governance, notably through its planned merger with Banco BPM, designed to create a third national banking giant capable of competing with UniCredit and Intesa Sanpaolo.
Mediobanca, founded in Milan in 1946, quickly established itself as Italy's leading investment bank, playing a key role in the country's industrial reconstruction after the Second World War. Unlike Monte dei Paschi di Siena, its business model is based on highly profitable activities and limited exposure to credit risk, enabling it to weather banking crises without suffering major turbulence. Thanks to this cautious approach, Mediobanca has firmly established itself as a key player in Italian finance, with a strategy focused on financing large corporations and M&A operations.
In 2024, the bank posted a net profit of 1.27 billion euros, confirming its financial strength, of which 260 million euros came from dividends paid by Generali, Italy's leading insurer. Mediobanca structures its activities around three main pillars: Corporate & Investment Banking, which supports major financial transactions in Italy; Wealth Management, which targets wealth management and private banking; and Compass, its subsidiary specializing in consumer credit and bank cards, a fast-growing segment. In addition, Mediobanca holds a strategic 13% stake in Generali, valued at around 6.4 billion euros, making it a central player in Italian capitalism. This position makes it the object of covetous interest from influential shareholders, notably the Del Vecchio and Caltagirone families, who have been seeking for several years to strengthen their control over Generali and reshape the governance of the Milan-based investment bank.
3. An aggressive offer: details and strategic objectives
The ambitious MPS offer is based on an exchange of 23 MPS shares for 10 Mediobanca shares, offering a premium of just 5% over Mediobanca's last closing price. This exceptionally low premium immediately raised concerns among analysts and shareholders, who saw it as more of a political and strategic manoeuvre than a sound industrial rationale. It is indeed surprising that a historically fragile bank like MPS should attempt to acquire a financial institution twice its size, when it has only just emerged from a decade of crises and successive recapitalizations. The market reacted sceptically to this announcement, with Mediobanca's share price rising only 4% after the announcement and currently 6% above the price offered by MPS, which clearly shows how little credence is given to this takeover, at least in these conditions.
Behind MPS's official arguments, claiming that the merger would create a more diversified banking group integrating Mediobanca's investment banking and asset management, there appears to be a more political and opportunistic strategy. The real objective could be the indirect takeover of Generali, Italy's leading insurer, in which Mediobanca holds a 13% stake. This holding has always been a major point of contention between Mediobanca and influential investors such as Delfin (the Del Vecchio family holding company) and Francesco Gaetano Caltagirone, who have been seeking for years to strengthen their influence over Generali. A merger between MPS and Mediobanca would provide Caltagirone and Delfin with strategic leverage to alter the balance of power on Generali's Board of Directors, where the May 8 meeting promises to be decisive.
4. Buyout triggers political outcry
In addition to private investors, the Italian government and several political figures have expressed concerns about MPS's attempt to acquire Mediobanca. Economy Minister Giancarlo Giorgetti has questioned the feasibility of the deal, which disrupts Italy's planned bank consolidation strategy. The government's initial objective was to promote a merger between MPS and Banco BPM, in order create a third major national banking group capable of competing with UniCredit and Intesa Sanpaolo. The MPS takeover bid for Mediobanca calls this project into question and raises questions about the true motives behind the bid. Incidentally, it's quite funny to see many members of the Italian government complaining about this takeover, but it's the government that is still the main shareholder in MPS, and virtually all the executives managing this attempted takeover were appointed by the Ministry of the Economy when the bank was still semi-public. So, if the Italian government really wants to prevent this takeover, it would already have had plenty of opportunities to do so, especially as it was most certainly informed well before the takeover attempt was officially announced. Despite this, one of the most controversial points is the origin of the funds enabling MPS to finance this acquisition. Numerous parliamentarians and economists have denounced "a takeover financed with taxpayers' money", pointing out that MPS has benefited from seven recapitalizations since 2008, totalling €25 billion, including a public bailout of €5.4 billion in 2017
5. An offer doomed to failure?
At present, everything suggests that the MPS takeover bid for Mediobanca is unlikely to succeed. The unanimous rejection of Mediobanca's Board of Directors, the absence of clear synergies, the hostility of the financial markets and doubts about MPS's ability to absorb a larger institution considerably weaken this operation. If MPS fails in its attempt, the bank could find itself weakened, paving the way for other consolidation scenarios, including a merger with Banco BPM or BPER Banca, as initially envisaged by the Italian government.
V. BPER Banca's public exchange offer for Banca Popolare di Sondrio: an ambitious defensive strategy
1. An Offensive Driven by the Reconfiguration of the Banking Sector
BPER Banca's public exchange offer for Banca Popolare di Sondrio (BPSO), valued at 4.5 billion euros, is fully in line with the consolidation dynamic transforming the Italian banking landscape. Faced with the ambitions of UniCredit, which is attempting to take over Banco BPM, mid-sized banks are seeking to strengthen their position to avoid being marginalized. This operation is as much a defensive move as a strategic one, with enabling BPER to expand its presence in the Lombard market and increase its domestic market share. Unipol, the main shareholder of both institutions with 24.5% of BPER's capital and 19.72% of BPSO's, plays a key role in this merger. Its growing influence in BPER's governance makes it a central player in this consolidation, facilitating negotiations and directing the group's strategy towards strengthening its regional and national base.
2. A merger with multiple strategic benefits
BPER Banca's acquisition of Banca Popolare di Sondrio is part of a strategy to strengthen its geographical and commercial presence, particularly in Lombardy, Italy's most dynamic economic region. The merger would increase BPER's market share in Lombardy to 14%, considerably strengthening its presence in a key territory for the banking sector. In addition, the complementary nature of the networks between BPER and BPSO limits the risk of massive branch closures, a point that is often problematic in bank mergers. In its press release, BPER argues that commercial synergies and the strong local presence of both institutions will facilitate the integration of customers and services, maximizing cross-selling and loyalty opportunities.
In financial and operational terms, BPER estimates that the merger would generate around 100 million euros in additional revenues per year, mainly through improved sales productivity and increased cross-selling of financial products. In addition, cost savings are estimated at 190 million euros a year, through better optimization of infrastructures, rationalization of administrative costs and more efficient management of human resources. Once merged, the new group would weigh in at close to 200 billion euros in assets, with sales in excess of 7 billion euros and an estimated net profit of over 2 billion euros.
A key element of the deal is the central role played by Unipol, the main shareholder in both banks, which plays a decisive strategic role in this operation. Unipol holds a 24.5% stake in BPER (19.77% directly in shares and the remainder via derivatives) and a 19.7% stake in BPSO, a position which gives it major influence over the merger. By actively supporting this offer, Unipol aims to strengthen its control over the distribution channels for insurance and asset management products, BPER and BPSO being major distributors of its financial solutions. Unipol's CEO, Matteo Laterza, has made it clear, however, that his group does not plan to hold more than 20% of BPER's capital after the transaction, thus seeking to allay fears that the insurer might have too strong a hold on the governance of the new entity. Significantly, Unipol's representative on the BPSO Board of Directors abstained from the vote on the takeover bid, a strategic decision which may reflect a desire to avoid any perceived conflict of interest. It also shows that in the event of a non-repurchase, Unipol would not want there to be too much resentment towards it on the part of BPSO or BPER management.
3. Reactions to the takeover proposal
BPER Banca's public exchange offer for Banca Popolare di Sondrio (BPSO) has met with significant opposition from BPSO's Board of Directors, which has expressed reservations about the offer's valuation and defended its independence. The cooperative bank, historically rooted in northern Italy, believes that the offer of 1.45 BPER shares for each BPSO share, valuing the institution at around 4.5 billion euros, does not fully reflect its potential. The bank points to its autonomous growth (share price increase of over 300% in 5 years), its strong regional customer base and its historical independence as arguments against integration into a larger group. Unipol's growing influence in BPER's strategy is also fuelling mistrust, with some observers seeing this consolidation as a manoeuvre orchestrated by the insurer to strengthen its grip on the banking sector.
Market reaction to this announcement was mixed, with the BPER share price falling by almost 10% since the announcement of the takeover bid. This reflects scepticism about the ability of the transaction to generate significant value for shareholders. The scale of the synergies announced (190 million euros in annual savings and 100 million euros in additional revenues) is being questioned, with some analysts doubting the speed and effectiveness of their implementation. Fabio Panetta, Governor of the Bank of Italy, recently stressed that bank mergers should not be treated as a "talk show", insisting that supervisory authorities must ensure that such operations lead to stronger, more efficient banks. However, he made it clear that the final decision rests with investors and regulators, signalling that the state does not intend to interfere directly in this transaction.
From a regulatory and competitive point of view, the transaction still requires the approval of the ECB and Consob, the Italian financial markets authority. These regulators could impose conditions on the transaction, notably to ensure full transparency in the integration of the two institutions and avoid any risk of excessive concentration on the Lombard market. In addition, a challenge to the takeover bid by certain minority shareholders could also slow down the integration process or force BPER to revise its conditions upwards. Indeed, the 6.6% premium at the time of the offer is very low, and the very next day it turned into a negative premium of -4%, a sign of investor mistrust. Incidentally, all the premiums involved in these Italian buybacks are very low, which is quite unprecedented.
VI. What next for banking consolidation in Italy?
1. The Key Battlefield: Generali and UniCredit's Equity Investment
On February 2, 2025, UniCredit took the market by surprise when it revealed that it held a 4.1% stake in Generali, Italy's leading insurer and a key player in European finance. This unexpected announcement added a new dimension to the war of influence that has been waging around Generali for several years. Indeed, the insurer's shareholder base is divided into several camps, which alternately ally and challenge each other.
The investment bank Mediobanca, Generali's long-standing shareholder with 13% of the capital, which uses this holding as a major strategic lever and whose income depends to a large extent on the dividends paid out by the insurer.
Delfin (Del Vecchio family) and Francesco Gaetano Caltagirone, who together hold 17% of Generali's capital and have been campaigning for years to reduce Mediobanca's influence over the insurer, judging its management to be too cautious and unambitious.
Edizione Holding, owned by the Benetton family, holds 4.8% of the capital. Historically, Edizione Holding has remained aloof from Generali's power struggle, but its involvement could tip the balance.
Officially, UniCredit CEO Andrea Orcel tried to play down the significance of the acquisition, telling CNBC on February 11 that "it's a purely financial investment. We have no strategic interest in Generali." On the same day, the Italian bank announced that it had further increased its stake to 5%. However, this statement is hard to convince analysts, who suspect that UniCredit is trying to position itself as a new major player in Generali's governance. With this acquisition, UniCredit could potentially join forces with Delfin and Caltagirone to weaken Mediobanca, or even call into question the role of Alberto Nagel, CEO of the Milan-based investment bank. Nagel has spent his entire career at Mediobanca, where he has been CEO for over 20 years. Orcel, who has a long-standing rivalry with Nagel, could thus seek to limit his influence, while opening the door to a reorganization of Generali's capital.
Generali is no ordinary company for Italians. Valued at around 49 billion euros, the insurer is not only the market leader in Italy, but also one of Europe's biggest players, alongside Allianz, Axa and Zurich Insurance Group. Its role in the Italian financial ecosystem is strategic for other Italian banks, but also for the state. Indeed, the insurer plays a key role in the country's financial stability, holding a significant share of Italian sovereign debt. In a context where public debt exceeds 140% of GDP, Italy cannot afford for the insurer to fall under foreign influence or become the site of a protracted shareholder war. As can be seen in the figure below, Generali has completely underperformed in relation to its major European competitors over the last 20 years, a trend that the Italian government, Delfin and the Caltagirone family would no doubt like to reverse.
A major issue is the reorganization of Generali's asset management business. In January 2025, Generali and Natixis announced their intention to create a 50/50 joint venture, merging their activities to form the second largest asset manager in Europe, with 1.9 trillion euros in assets under management. The move is aimed at achieving sufficient scale to compete with the industry's American giants. Nicolas Namias, CEO of BPCE, parent company of Natixis, said, "I know perfectly well that Natixis as a stand-alone entity cannot be a global champion in the long term." However, the partnership is causing concern in Italy. The Italian government, led by Giorgia Meloni, has expressed reservations about the deal's implications for national savings, essential for refinancing the country's public debt. The agreement requires the approval of the Italian government under the "special powers" that allow it to oversee transactions deemed strategic. Despite opposition from some minority shareholders, Generali CEO Philippe Donnet said the deal had been approved by a "large majority» and described the idea that Italian savings would be transferred abroad as a "joke”.
2. Current Offers: Success or Failure
UniCredit and Commerzbank: A strategy running out of steam
The proposed takeover of Commerzbank by UniCredit ran into two problems. The German government and the target bank were clearly opposed to a takeover of UniCredit, and denounced an attempt that would create thousands of jobs in Germany and put the country at risk in the event of banking problems in neighbouring Italy. UniCredit alone created the second problem when it launched its bid for Banco BPM, effectively putting the Commerzbank takeover on hold. Indeed, both Andrea Orcel and many Italian officials declared that 2 takeovers and integrations at the same time were completely impossible. The Italian offensive on the German bank is therefore on hold, at least until the German elections on February 23 and the ECB's decision on whether or not to authorize UniCredit to increase its stake in Commerzbank above the 9.9% threshold, which is expected by mid-March. But, even if the Frankfurt authorization comes through, forcing UniCredit to launch a takeover bid as it exceeds 29.9% of the capital, it could still be prevented by a new German government, which would certainly not want one of its first measures in a Germany in crisis to be to abandon one of the jewels of the national financial system to the Italians. According to the polls, the CDU, AFP and SPD, have all declared their opposition to this project and have pledged to fight it. It is therefore highly unlikely that this offer will see the light of day soon, the only unknown being whether or not UniCredit will keep its stake, at least a direct one, in its German rival, in order to attempt a new rapprochement in the future.
UniCredit's Offer for Banco BPM: A Deal in Peril
With Commerzbank's difficulties mounting, UniCredit went on the offensive for its compatriot Banco BPM at the end of November 2024. The takeover bid, offering an extremely low price (a premium of 0.5% on the last stock market price), immediately surprised investors, employees and the Italian government, who all opposed it in their own way. A 32% rise in BPM's share price since the announcement of the offer shows the reaction of the market, the speeches and press releases of the target bank and many ministers, and those of other stakeholders. Moreover, Crédit Agricole, the reference shareholder with 15.1% of the capital, is also opposed to the operation, preferring to consolidate its own partnership with Banco BPM rather than see UniCredit take control. It has also requested authorization from the ECB to increase its stake to 19.9%. This means that any deal will require Crédit Agricole's approval, an agreement that the French bank is likely to charge dearly for. From UniCredit's point of view, it is reasonable to assume that the offer made at the end of November is only the first step in a broader plan. Either UniCredit wants to use Italian legislation and the famous passivity rule to prevent Banco BPM from over-strengthening by buying asset manager Anima Holding and taking too many shares in MPS, as Banco BPM executives have denounced. Another possibility is that Andrea Orcel and his team really did intend to acquire their Milan-based competitor but knew from the outset that such a low premium would not be enough to convince shareholders. In this case, a second, more attractive and better-calibrated offer could follow, with a buyout price that is truly attractive to shareholders, particularly Crédit Agricole, whose endorsement will be decisive. If this scenario is confirmed, the first offer would have been made in a hurry, above all to prevent a strategic merger between Banco BPM, Anima and potentially MPS. The answer won't be long in coming by the end of May at the latest, when the passivity rule expires after its six-month deadline. What is certain is that the current offer has no chance of success, given the colossal price differential between what is being offered and the BPM share price.
MPS's hostile takeover bid for Mediobanca: a foregone conclusion?
On January 24, 2025, Monte dei Paschi di Siena (MPS) launched a €13.3 billion hostile takeover bid for Mediobanca, an attempt immediately rejected by the Milan-based bank's Board of Directors as illogical and dangerous to its identity and financial stability. Here too, the offer is characterized by a very low premium, of the order of 5% on Mediobanca's last share price. One gets the impression that only Delfin (19.8% of Mediobanca's capital) and Caltagirone S.p.a. (7.8%) are actively supporting the takeover bid. Their real aim is undoubtedly to strengthen their influence over Generali, in which Mediobanca holds a 13.1% stake. But beyond these shareholders, support is virtually non-existent, as the proposed price is not at all helpful. The position of the Italian Ministry of the Economy is very important in this operation. As explained above, although it is officially critical of the takeover, its position as mdajority shareholder in MPS makes it a key player. What's more, Francesco Gaetano Caldtagirone is reputed to be very close to Italian Prime Minister Giorgia Meloni, demonstrating yet again the disparity between the official and unofficial positions of certain members of the government. In its current form, the takeover is highly unlikely, whether because of its objective lack of interest, the virtual absence of synergy between the two banks, or because the proposed price is too low. One possibility is that this offer is simply intended to put pressure on Mediobanca, pending Generali's AGM on May 8. Once again, we see the rule of passivity, which prevents Mediobanca from participating for 6 months in the various consolidation attempts underway in Italy.
BPER's takeover of BPSO: Unipol as referee and player
Of all the operations we have seen, this is one of the mergers that makes the most sense, but paradoxically it is the one that has been least commented on by the media and analysts, certainly because of the secondary place occupied by the two banks on the European banking market. The two banks complement each other geographically, have more or less the same development strategy, and share a majority shareholder. Although the BPSO board initially rejected the offer, it is possible that BPER will re-evaluate it and offer a more attractive premium (15-20%, for example). The synergies envisaged, and above all greater independence from the two Italian banking behemoths, should more than pay for this additional cost from BPER's point of view. Unipol's position remains rather ambiguous. It is certain that the Italian insurer validated and encouraged this proposal, as it could be one of the main winners of this merger, concentrating its power and influence on what would certainly become Italy's 4th or even 3rd largest bank in terms of assets, neck and neck with Banco BPM. However, the commitment of its CEO, Matteo Laterza, not to exceed 20% of the capital of the new entity, is certainly intended to reassure investors about Unipol's role as a minority shareholder. The abstention of its representative on the BPSO Board of Directors during the vote on BPER's offer also demonstrates the insurer's mistrust, and its desire to perpetuate its shareholding whatever the outcome of the offer. The reaction of the two share prices suggests that many shareholders are not completely opposed to the takeover, but simply unconvinced by the price. We'll have to wait and see how BPER reacts to BPSO's refusal, as I think an aggressive takeover bid is out of the question given Unipol's shareholder base and the special situation between the two banks.
3. What are the next M&A targets?
As we have seen, the Italian banking sector is in the midst of restructuring, and in the current context of growth in net interest income, which measures the difference between interest received and interest paid on deposits. In fact, the vast majority of Italian banks grant loans at variable rates, which has proved highly profitable for them in recent years. In a country with such record bank profits, the time is ripe for mergers and acquisitions. To get an idea of the next target or predator, we can focus on the numerous regional banks, which have a very heterogeneous shareholder base. They could either be bought out by one of the two big banks (UniCredit or Intesa Sanpaolo), merge with each other to become more competitive, or even be taken over by a foreign player.
Let's look at the main regional banks and see if they can get in on the act.
Credito Emiliano (CE): Independence under pressure
Less exposed to takeover risks thanks to its strong family control, Credito Emiliano has a market capitalization of 4 billion euros and remains in the hands of the Maramotti family, owners of the Max Mara clothing brand, with a 79.5% stake. It is therefore highly unlikely to be the target of a takeover, given its sound financial situation and that of its shareholder. Nor is it likely to make any major acquisitions, given its small size and limited financial leeway.
Banca Mediolanum (BMED): a solid family stronghold
With a capitalization of 10.1 billion euros, Banca Mediolanum is firmly under the control of the Doris and Berlusconi families, who own 43% and 30% respectively. This locked-in shareholder structure makes an external takeover unlikely. The shareholders' agreement has been in place since the bank was founded in 1997 and is unlikely to be broken today. A takeover is therefore virtually impossible, but the bank might be tempted to make an acquisition, which would nevertheless have to remain modest enough to prevent the two families' shareholding falling below 50%.
FinecoBank (FBK): The Independent Digital Bank
FinecoBank, with a capitalization of 11 billion euros, has established itself as a leader in digital banking in Italy. A former UniCredit subsidiary, it became independent in 2019 and relies on a 100% online model, combining banking, wealth management and brokerage. Thanks to its innovative positioning and international expansion, notably in the UK, Fineco remains outside the consolidation game. Its independence and digital success set it apart from the rest of the fast-changing banking sector.
Banca Generali (BGN): A key player in wealth management
With a market capitalization of around 6 billion euros, Banca Generali is one of Italy's leading wealth management and private banking companies. A subsidiary of the Generali Group, in which it holds a 50.2% stake, it stands out for its network of financial experts and its high-end offering for wealthy clients. Unlike the big retail banks, Banca Generali is staying out of the big consolidation manoeuvrers, preferring to focus on organic growth and the development of innovative investment solutions. Generali would have no interest in selling the bank, nor in integrating it
4. Only the beginning of banking consolidation?
The Governor of the Bank of Italy, Fabio Panetta, pointed out on February 15 that the average asset size of the five main Italian banks is four times smaller than that of French banks. He also noted that these mergers are favoured by the abundance of surplus capital and the need to seek economies of scale in the face of shrinking interest margins. It is therefore certain that Italian banks have limited timing to make their acquisitions, before rates fall too much, and their revenues with them. With 3 bids currently on the table in Italy, it's likely that there will be a short pause over the next few weeks, until either an agreement is reached, or the passivity rule expires and a new marriage can be formed, such as Mediobanca and UniCredit, Banco BPM and MPS as dreamt of by the Italian government, or Intesa Sanpaolo's acquisition of Banco BPM or another regional bank to avoid losing its leadership position to rival UniCredit. An even crazier scenario would be the relaunch of negotiations between UniCredit and Societe Generale, as dreamed of by Jean Pierre Mustier in 2018. Whatever the case, it's safe to assume that the M&A departments of the major investment banks will still have their work cut out for them in the Italian banking sector over the coming months.
VII. Key dates in Italian banking consolidation
Date | Event |
11/09/2024 | UniCredit confirms the purchase of 4.5% of Commerzbank shares from the German government at €13.20 per share, totalling €700 million. |
23/09/2024 | UniCredit increases its stake to 21% through financial derivatives, signalling its intention to expand further. |
25/11/2024 | UniCredit submits a €10.1 billion takeover bid for Banco BPM, aiming to create Italy's largest retail bank. |
26/11/2024 | Banco BPM rejects UniCredit's takeover bid, calling it undervalued and restrictive. |
06/12/2024 | Crédit Agricole increases its stake in Banco BPM to 15.1%, making a UniCredit takeover more difficult. |
18/12/2024 | UniCredit raises its exposure in Commerzbank to 28%, including 9.5% in direct shares and 18.5% in derivatives, aiming for 29.9%. |
24/01/2025 | Commerzbank's board, led by CEO Bettina Orlopp, publicly rejects UniCredit's approach, reaffirming its commitment to a standalone strategy. |
24/01/2025 | MPS launches an unsolicited €13.3 billion takeover bid for Mediobanca. |
28/01/2025 | Mediobanca's board rejects MPS's offer, calling it financially unsound and industrially unjustified. |
02/02/2025 | UniCredit acquires a 4.1% stake in Generali, increasing speculation about its strategic moves in the Italian financial sector. |
06/02/2025 | BPER Banca announces a €4.5 billion public exchange offer for Banca Popolare di Sondrio. The proposed deal aims to strengthen BPER's position in the Italian banking sector. |
11/02/2025 | Banca Popolare di Sondrio's board of directors formally rejects BPER Banca's takeover offer. The bank emphasizes its preference for independence, stating that the offer does not fully reflect its strategic value. |
VIII. Complete diagram of the banking consolidation underway in Italy
IX. Sources:
International Press:
Financial Times (www.ft.com)
Wall Street Journal (www.wsj.com)
Bloomberg (www.bloomberg.com)
Reuters (www.reuters.com)
S&P Global Market Intelligence (www.spglobal.com)
The Banker (www.thebanker.com)
Italian Press:
Il Sole 24 Ore (www.ilsole24ore.com)
Corriere della Sera (www.corriere.it)
La Repubblica Finanza (finanza.repubblica.it)
Milano Finanza (www.milanofinanza.it)
La Stampa (www.lastampa.it)
Il Messaggero (www.ilmessaggero.it)
La Provincia Unica (www.laprovinciaunicatv.it)
European Press:
Les Échos (France) : (www.lesechos.fr)
L’Agefi (France) : (www.agefi.fr)
Le Figaro (France): (www.lefigaro.fr)
Handelsblatt (Germany) (www.handelsblatt.com)
Frankfurter Allgemeine Zeitung (FAZ, Germany) (www.faz.net)
Press Releases and Institutional Sources:
21. BPER Banca (Press releases and financial reports) (www.bper.it)
22. Banca Popolare di Sondrio (Press releases and financial reports) (www.popso.it)
23. UniCredit (Official reports and announcements) (www.unicreditgroup.eu)
24. Commerzbank (Press releases on the UniCredit deal) (www.commerzbank.de)
25. Mediobanca (Information and responses to MPS’s offer) (www.mediobanca.com)
26. Monte dei Paschi di Siena (Documents on the Mediobanca offer) (www.mps.it)
27. Generali (Information on shareholders and strategy regarding takeover attempts) (www.generali.com)
28. Bank of Italy (Official statements on banking consolidation) (www.bancaditalia.it)
29. European Central Bank (ECB oversight of banking M&A in the euro area) (www.ecb.europa.eu)
30. CONSOB (Italian financial markets regulator) (www.consob.it)
Stock market information:
31. Marketscreener (www.marketscreener.com)
32. Yahoo Finance (www.finance.yahoo.com)
33. StockAnalysis (www.stockanalysis.com)
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Written by Hippolyte Metzger-Otthoffer
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