Move regarding BPM. Paris plans a third hub. The challenge to Giorgetti

Italy’s third-largest banking group could be in the making, though not quite as Giancarlo Giorgetti had envisaged. Crédit Agricole has proposed to Banco BPM that it enter into negotiations to merge the bank led by Giuseppe Castagna with Crédit Agricole Italia. This is not yet an agreement, nor is it a takeover bid. It is a plan that reshapes the landscape and shifts its centre of gravity.

The new bank would remain listed in Milan, keep Banco BPM at its core and retain Castagna as chief executive. It would have 6.5 million customers, over 2,300 branches and would be the country’s third-largest banking group. To win over shareholders, the French are proposing a share swap which, according to their calculations, incorporates a 20 per cent premium, plus a one-billion extraordinary dividend. They estimate synergies of 800 million per year. But the political implication is another matter: Crédit Agricole’s stake in the new company would rise from 29.6 per cent to 45 per cent. An Italian bank in terms of its headquarters, market and leadership, with a French partner wielding decisive influence.

Giorgetti had been pursuing a different plan. He envisaged a third financial powerhouse built around Monte dei Paschi and Banco BPM, with Mediobanca and Generali in the background and the Treasury calling the shots. The aim was to create a competitor to Intesa and UniCredit without handing decision-making power to Paris. That plan already suffered a setback on 29 October, when the MPS shareholders’ meeting rejected Luigi Lovaglio’s plan, including the bid for BPM. Meanwhile, Intesa Sanpaolo has obtained Consob’s approval for the documentation relating to its bid for MPS.

Crédit Agricole is now proposing a solution: the third financial hub can go ahead even without Siena. Obstacles remain: approval is needed from BPM’s shareholders and the ECB, and the ‘golden power’ clause must be examined. And this is where things become tricky for Giorgetti. Following the standoff that accompanied UniCredit’s withdrawal from BPM, the government will have to assess a plan that strengthens the Milan-based bank but increases French influence. Giorgetti had said that the rules apply to everyone. Now the test is to see which rules he will apply.