Italy's BPM ups guidance, eyes Credit Agricole Italy for M&A after MPS talks end

By Andrea Mandala

MILAN, Aug 5 (Reuters) - Banco BPM strengthened its 2026 profit outlook on Wednesday and said it would consider a tie-up with the Italian unit of Credit Agricole, after failing to strike a deal with Monte dei Paschi di Siena (MPS).

Banco BPM, Italy's fourth-largest bank, last week said it was abandoning a plan to seek a merger with MPS after making no definitive progress since it first proposed discussing a tie-up in early June.

The proposal was a last-ditch attempt to challenge a takeover offer by Intesa Sanpaolo for MPS.

The decision to stop merger efforts directed at MPS came after BPM's main shareholder, France's Credit Agricole, said it saw no value in such a transaction and expressed a preference for BPM to combine with its own Italian unit.

Credit Agricole owns around 29% of BPM having raised its stake last year amid a wave of consolidation in Italian banking.

CEO Giuseppe Castagna, who has always said the two M&A options for BPM were either MPS or Credit Agricole Italia, said the latter would be "a very solid merger" from an industrial standpoint.

"We would examine this potential opportunity if it becomes true and possible," Castagna told an analyst call.

He added that any transaction would have to be structured so as to protect the interests of minority investors.

"We (would) have to find a solution that makes happy all the other shareholders of the bank," he said.

BPM strengthened its 2026 outlook guiding for a dividend potentially higher than its existing target of €1 euro per share on the back of a net profit of more than €1.95 billion - its previous forecast.

It increased the overall shareholder remuneration for the 2024-2027 period by €1 billion to around €7 billion, to be paid out via cash dividends and share buybacks.

It will communicate the size of the buybacks only after receiving European Central Bank approval, which it is yet to seek, it said.

Net income in April-June totalled €581 million, well ahead of a €531 million Reuters analyst consensus forecast.

The figure was down from €704 million a year earlier, when it included a €202 million one-off gain from the revaluation of a stake in asset manager Anima Holding which BPM acquired last year.

(Reporting by Andrea Mandalà, editing by Valentina Za)