BPM and Credit Agricole in Focus: Rome Sets Conditions for a Possible Banking Alliance

The Italian government is setting clear guidelines for a potential merger between Banco BPM and the Italian subsidiary of the French Crédit Agricole, as announced by Economy Minister Giancarlo Giorgetti. After a failed takeover attempt by UniCredit, Banco BPM is seeking a suitable merger partner. CEO Giuseppe Castagna names Crédit Agricole Italia and the state-supported Monte dei Paschi di Siena (MPS) as the main options. Since MPS is currently busy with the acquisition of Mediobanca, an alliance with Crédit Agricole Italia seems more likely. Giorgetti clarified that in such a merger, the so-called 'golden powers' would be applied, aiming to protect critical assets. 'I have no political objections; I have a law that I must enforce,' he said, citing his obligation to exercise these regulatory rights. Amidst these negotiations, Castagna traveled to Rome to discuss possible merger options for the Milan-based bank with leading government officials. Banco BPM holds a 9% stake in MPS, while Crédit Agricole is considered the biggest investor in BPM. This underscores the significance of Banco BPM as Italy's third-largest bank in financing small businesses. Italy represents Crédit Agricole's largest foreign market and is also crucial for the asset manager Amundi. Italian Prime Minister Meloni has emphasized that Italian savings should be invested domestically, particularly in light of the high refinancing needs of both Italy and France. Against the backdrop of repeated efforts to establish a third major banking institution alongside Intesa and UniCredit, a merger between BPM and MPS appears to be an enticing possibility. However, the initial plan first failed due to an offensive by UniCredit, which has now fallen through.