Monte dei Paschi CEO to unveil strategy to fend off Intesa's €36 billion bid

By Valentina Za, Andrea Mandala and Giulio Piovaccari

MILAN, Aug 20 (Reuters) - Monte dei Paschi di Siena's CEO Luigi Lovaglio will present a strategy to the Italian bank's board on Thursday to counter bigger rival Intesa Sanpaolo's €36 billion takeover bid, three people close to the matter said.

Analysts have suggested MPS could make use of an asset acquired through its 2025 takeover of Mediobanca, a 13% stake in Italy's biggest insurer Generali, or draw on its own cash reserves to bolster returns to shareholders and counter the €3 billion in cash Intesa has offered.

Worth €8.5 billion at current market prices, the Generali stake could be sold or traded for another asset, analysts have said. MPS CEO Luigi Lovaglio declined to provide any details during an analyst call on August 7. People familiar with Lovaglio's plans previously ruled out disposing of the Generali stake.

MPS had 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.

The board meeting began at 0700 GMT to discuss options, one of the three sources said.

BREAK-UP

Intesa plans to 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 will destroy value, while Prime Minister Giorgia Meloni has expressed her hope MPS may not be "dismembered", despite insisting the government is playing no active role.

Intesa's unsolicited cash-and-share offer in June marked the latest development in a consolidation wave that has reshaped Italian banking over the past 21 months.

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.

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