The expected merger between Monte dei Paschi di Siena (MPS) and Banco BPM abruptly ended on July 31, upending plans to form Italy’s second-largest bank. Banco BPM ended talks citing stalled progress and opposition from its biggest shareholder, Crédit Agricole. Ironically, MPS is now considering acquiring the very bank that walked away.
How the Merger Collapsed
On June 7, the two banks announced a merger of equals proposal. The combined group would have been valued near €50 billion, creating a powerhouse in European banking. MPS was valued at about €27.3 billion, Banco BPM at €20.3 billion. But the harmony dissolved the next day when Intesa Sanpaolo launched an unsolicited €30.6 billion takeover bid for MPS, disrupting the scene.
Crédit Agricole's resistance to losing influence in Banco BPM stalled the merger further; the French bank’s opposition was decisive. By late July, Banco BPM’s board threw in the towel. What started as cooperation ended with a stalemate that leaves MPS in the unusual position of the potential aggressor, flipping the takeover script on its head.
The Stakes for Italy’s Oldest Bank
MPS, founded in 1472, has struggled for years beneath a heavy load of losses and state bailouts. The Italian government stepped in as a major shareholder during the rescue phase but has been steadily retreating, now holding just an 11.7% stake after selling off 15% for €1.1 billion in recent years.
A merger would have created a domestic juggernaut capable of standing toe-to-toe with Intesa Sanpaolo and UniCredit, while offering Rome a neat exit strategy from its remaining shares. Now, with that door closed, MPS is weighing multiple strategies including a potential takeover of Banco BPM itself a bold move that could reshape the Italian banking sector once again.
This is informational content, not financial advice.
