Lovaglio fears the French; Orcel takes a step forward at Generali. Risiko and chaos

The grand finale of the banking risk game is drawing near – “The end of the game”, as someone has dubbed it – but the playing field is littered with landmines. Last night, a mystery emerged that speaks volumes about the atmosphere that is beginning to take hold. The AdnKronos news agency broke the story that MPS had taken a step back regarding Banco BPM. According to this rumour, relayed to the agency by financial sources, CEO Luigi Lovaglio’s strategy could take a different direction from that outlined in recent weeks and focus, at least at this stage, exclusively on Banca Generali. Sources close to the matter, however, reiterate to Il Foglio that the Siena-based bank “is focused on continuing with the business plan as announced to the market, involving the two takeover bids for Banco BPM and Banca Generali”. Indeed, calling a halt to the BPM bid would be, to say the least, at odds with the spirit of the overall operation, which was publicly presented by Siena as an alternative to the public takeover bid launched by Intesa Sanpaolo with the support of Unipol-Bper. Doubts, however, stem from the fact that BPM’s largest shareholder, the French bank Crédit Agricole, has been very lukewarm about a possible merger with MPS, and to date there are no signs that its position has changed. For Paris, the preferred option would be for the Milanese bank to merge with Crédit Agricole Italia, even though the deal could cause discontent within the Meloni government on the eve of the general election. The Milan-based bank, dear to the League, is set to go to the French. This is an unpalatable scenario for Palazzo Chigi, however often it is reiterated that the government wishes to remain neutral in the banking consolidation process.

Lovaglio has so far relied on this very discontent to build his proposal, based on a dual public exchange offer: BPM and Banca Generali. As things stand, according to AdnKronos, the BPM deal would not necessarily be shelved, but could represent a second phase of the project. In short, the early involvement of Banca Generali – in which Lovaglio has greater confidence – would allow MPS to tackle the Milanese issue from a position of greater strength. Such rumours, however, fail to take into account the fact – as legal experts explain to our newspaper – that the dual offer has now been launched by Siena pursuant to Article 102 of the Consolidated Law on Finance. And that the course cannot be changed without a substantial and detailed disclosure to the market. This is the classic situation that would require Consob to intervene by requesting clarification from MPS (“without delay”, as required by law), given that various securities of listed companies are involved. In all this, however, one thing is certain. Any party intending to make a move on Banco BPM will inevitably have to deal with the French group. Lovaglio, for his part, is said to have opened channels of communication with Paris, though it is not yet known what the outcome of these discussions might be. The presence of Crédit Agricole effectively acts as a deterrent for Unicredit too, which has never ceased to regard Banco BPM as an attractive target for increasing its influence in Italy, where the gap with Intesa Sanpaolo risks widening.

Meanwhile, the bank led by Andrea Orcel has secured the so-called Danish Compromise from the ECB, the benefits of which, for the time being, do not extend to its stake in Generali. For a bank, securing the Danish Compromise means benefiting from a capital discount on shareholdings in insurance companies, but only when these shareholdings confer control and allow for consolidation. The paradox is that not even MPS is certain to secure this advantage for the 13 per cent stake it currently holds in Generali via Mediobanca. This is because – according to EU rules – the ‘Danish Compromise’ is not inherited. The merchant bank based in Piazzetta Cuccia benefited from it as a result of ‘grandfathering’ from Trieste. Mediobanca, controlled by the institution led by Luigi Lovaglio, does not – at least not yet. Furthermore, the Danish rule does not apply to insurance companies acquiring banks. For example, Philippe Donnet, CEO of Generali, will not benefit from capital advantages should he become a shareholder in Montepaschi following the swap with Banca Generali proposed by Lovaglio. Donnet would not be opposed to supporting the deal if it were to create value for the group. In return, Generali is aiming to take Axa’s place in the insurance partnership, which expires in 2027. And Lovaglio is hinting at this possibility.