UniCredit (CRDI.MI) and Credit Agricole (CAGR.PA) have reportedly failed to make any meaningful progress in their initial talks regarding Italy’s Banco BPM (BAMI.MI), according to a report in the Italian daily la Repubblica on Wednesday. The discussions were centered around a potential merger involving Banco BPM and Monte dei Paschi di Siena (BMPS.MI), but the meeting ultimately proved fruitless.
The two banks reportedly met following a key development in the Italian banking sector—namely, the Italian government’s recent placement of a stake in Monte dei Paschi, which has long been a state-controlled entity. However, the meeting, which was held between senior executives from both banks, did not involve the CEOs of UniCredit and Credit Agricole, Andrea Orcel and Philippe Brassac, respectively. Instead, the meeting was handled by lower-level managers, according to sources cited by la Repubblica.
The main point of contention during the discussions seemed to revolve around Credit Agricole’s role as the primary investor in Banco BPM, a position that has made the French bank a key player in any potential merger. UniCredit, led by CEO Andrea Orcel, reportedly initiated the talks, suspecting that Credit Agricole may have been quietly increasing its stake in Banco BPM through derivative instruments. Such a strategy could potentially give Credit Agricole more influence over a combined Banco BPM and Monte dei Paschi entity, should a merger move forward.
A larger stake in Banco BPM would enhance Credit Agricole’s ability to maintain its position as a significant shareholder in a merged entity, thus ensuring its strategic control over the newly formed financial group. The Italian government, which has been trying to engineer consolidation in the country’s fragmented banking sector, is keen on seeing a merger between Banco BPM and Monte dei Paschi. Such a merger would help reduce the number of banks in Italy and create a stronger, more competitive financial institution.
Despite these dynamics, the initial talks between UniCredit and Credit Agricole reportedly led to no tangible outcomes. The two banks were unable to align their positions, with UniCredit allegedly rejecting proposals from the French bank, signaling that the merger discussions would require more time and negotiation to bear fruit.
Representatives from both banks were quick to downplay the significance of the meeting. A spokesperson for Credit Agricole Italia told Reuters that the bank would not comment on “press rumors,” and UniCredit also declined to provide any official statement on the matter. The lack of official comments from either party adds to the uncertainty surrounding the future of these talks.
The report also mentioned that UniCredit was seeking to schedule a follow-up meeting with Credit Agricole in January 2025. While the outcome of this future meeting remains uncertain, the banks appear to be committed to exploring potential synergies between Banco BPM and Monte dei Paschi, albeit in a more cautious manner.
The merger of Banco BPM and Monte dei Paschi is seen as a crucial move for Italy’s banking sector. Monte dei Paschi, which has struggled with profitability and non-performing loans for years, has been under government control since 2017. The Italian government has been keen to offload its stake in the bank, and a merger with Banco BPM could be a viable way to achieve this, while also strengthening the Italian financial system.
At this stage, it remains unclear whether UniCredit and Credit Agricole will ultimately come to an agreement on a deal. However, the fact that the banks are engaging in dialogue suggests that there is still interest in pursuing a potential merger, even if the process is likely to be protracted and complex.
As the banks continue their discussions, market observers will be watching closely to see if this merger will gain traction in the coming months. The dynamics of the deal will be heavily influenced by factors such as government policy, shareholder interests, and the broader economic climate in Italy and Europe.
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