Italy’s next bank deal hangs on time and UniCredit

Banco BPM SpA

01/05/2026 11:48

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Neil Unmack

LONDON, May 1 (Reuters Breakingviews) - Like buses, investment bankers can wait ages for a deal, and then two come at once. Luigi Lovaglio, the returning CEO of Banca Monte dei Paschi di Siena BMPS.MI, recently cemented his role after a boardroom putsch. It gives him license to fully integrate the recently purchased Mediobanca, and potentially even make a move on 19-billion-euro Banco BPM BAMI.MI. The key variables are time – and UniCredit’s CRDI.MI Andrea Orcel.

A possible tie-up between Lovaglio-led Monte dei Paschi and BPM has been the talk of Milan for many months, not least because the government may favour it, according to Reuters reporting. A deal would create a group worth 46 billion euros, at current market values. While still much smaller than Intesa Sanpaolo ISP.MI and UniCredit, at 100 billion euros each, the combined entity would approximate a credible “terzo polo” or “third pole” in Italian banking. Assume cost savings equivalent to 30% of BPM’s operating expenses, or 900 million euros, and the marriage could create some 6 billion euros of value, after taking off tax and capitalising the annual figure.

Yet Lovaglio only just acquired Mediobanca, and has yet to delist it. He probably needs at least six months to finish the merger and show that he can integrate the businesses without losing Mediobanca’s core investment banking staff. That may even raise Monte dei Paschi’s own valuation, creating a more valuable M&A currency. It currently trades at 1.2 times forward tangible book value – well below most other Italian banks and BPM.

Another obstacle is Crédit Agricole. The French bank has a 20% BPM stake and four board seats. It could make life difficult for any Monte dei Paschi deal: Crédit Agricole, worth 50 billion euros, has much more firepower than the 28-billion-euro bank run by Lovaglio. He may therefore have to get the French bank onside by offering any branches that would be sold after the merger, boosting Crédit Agricole’s Italian business.

Then there is Orcel. UniCredit tried to buy BPM very recently, only to be thwarted by the government, and danced with Monte dei Paschi a few years ago. The danger, for Lovaglio, is that Orcel tries again. Monte dei Paschi might be a more attractive target since it would come with Mediobanca’s pedigree investment bank.

Orcel is currently tied up pursuing Germany’s 39-billion-euro Commerzbank CBKG.DE. But if Berlin continues to stymie him, UniCredit’s M&A attention will shift back home. And Delfin, a large shareholder in Monte dei Paschi, could even sell its 17% stake, putting the Tuscan bank in play.

All of which suggests that Lovaglio and his counterpart at BPM, Giuseppe Castagna, have every reason to move fast. A deal could suit them both personally. Lovaglio could run the combined group initially before handing over to the younger Castagna when he retires. Combining would also water down the influence of large investors like the tycoon Francesco Gaetano Caltagirone, who owns 10% of Monte dei Paschi. Sometimes M&A is just a question of whether a few individuals are ready to seize the moment.

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CONTEXT NEWS

Luigi Lovaglio, chief executive of Banca Monte dei Paschi di Siena, may sell the bank’s stake in insurer Assicurazioni Generali to fund a takeover of rival Banco BPM, the Financial Times reported on April 24.

Lovaglio in 2025 launched a successful 17 billion euro hostile takeover of rival Mediobanca. In April he led a shareholder campaign to recover the role of chief executive, having been ousted by the board.

Monte dei Paschi’s persistent valuation discount to Italian rivals https://www.reuters.com/graphics/BRV-BRV/klvyllrbgpg/chart.png

(Editing by Liam Proud; Production by Oliver Taslic)

((For previous columns by the author, Reuters customers can click on UNMACK/neil.unmack@thomsonreuters.com))