Monte dei Paschi OKs bids for BPM, Banca Generali to stave off Intesa takeover

By Valentina Za, Andrea Mandala and Giulio Piovaccari

MILAN, Aug 20 (Reuters) - Italian bank Monte dei Paschi di Siena on Thursday approved plans to bid for rival Banco BPM and wealth manager Banca Generali to counter a €36 billion ($42 billion) takeover from sector leader Intesa Sanpaolo, two people close to the matter said.

Monte dei Paschi (MPS), which has reached a market value of €36 billion after buying merchant bank Mediobanca last year, would pay in shares for BPM and Banca Generali, the people said. 

BPM is worth €25 billion and Banca Generali is worth €8 billion, pointing to a near €70 billion combined value for a joint group, versus Intesa's €121 billion. 

MPS declined to comment ahead of an official statement expected early on Friday. Intesa, BPM and Banca Generali had no immediate comment.

The plan by MPS CEO Luigi Lovaglio is the latest development in a consolidation saga that has been reshaping Italian banking since November 2024.

Lovaglio managed to secure approval from a majority of board members on Thursday. However, given Intesa's bid, the twin offers require qualified approval from MPS shareholders under Italian takeover rules. 

MPS had already explored a potential deal with Banco BPM to thwart Intesa's takeover, but the two banks said on July 31 they were ending their talks after BPM's main investor, France's Credit Agricole, expressed its disapproval of the plan.

With its Mediobanca takeover, MPS acquired a 13% stake in the country's biggest insurer Generali, a coveted asset in Italian finance. It also has cash reserves it can draw from to bolster returns to shareholders and counter the €3 billion in cash Intesa has offered.

The Generali stake is worth €8.5 billion at current market prices. Italian media reported a 4% Generali stake would be assigned to MPS shareholders as part of the plan, together with a cash payment. 

BREAK-UP

Intesa has said it would retain Mediobanca, the Generali stake and roughly half of MPS's branch network, having agreed to sell the other half to address antitrust concerns.  

Lovaglio has criticised that plan, saying it would destroy value. Last week, Prime Minister Giorgia Meloni expressed her hope that MPS may not be "dismembered" despite insisting the government is playing no active role.

Intesa's unsolicited cash-and-share offer for MPS in June came as Lovaglio worked to buy up the rest of Mediobanca and merge it into MPS, after defeating a challenge to his leadership from a key MPS shareholder.

Italian banks spent years restructuring before profits hit record levels when interest rates rose from 2022. MPS became the poster child for the sector's overhaul. 

Having been rescued by the state in 2017 and reprivatised in 2023 to 2024, it bought bigger peer Mediobanca with a €16 billion hostile bid and gained control of its prized stake in Generali.

MPS's biggest shareholders are Delfin, the investment vehicle of the Del Vecchio family, an eyewear business dynasty, and construction tycoon Francesco Gaetano Caltagirone. Both are also major Generali investors. 

Intesa launched its bid while UniCredit, Italy's second-biggest bank, was busy with a takeover of Germany's Commerzbank. In recent months UniCredit had also built a Generali stake which it described as a financial investment.    

($1 = 0.8559 euros)

(Reporting by Valentina Za, Andrea Mandala and Giulio Pioavaccari; Editing by Elaine Hardcastle, Will Dunham and Gavin Jones)