The merger between Banca Popolare di Milano (BPM), one of Italy’s strongest lenders, and Banco Popolare, which ranks among the weakest banks in terms of exposure to bad loans, was finally approved last Saturday after the vote of the shareholders of BPM. The deal was the result of several months of negotiations which were only at the beginning in February when Banco Popolare CEO Pier Francesco Saviotti and Popolare di Milano CEO Giuseppe Castagna agreed on the merger. Subsequently, when negotiations had already been going on for three months, a first agreement was signed in March and, in the end, the assemblies held in Milan and Verona decided the outcome of the transaction.
As expected, at Banco Popolare the result was almost unanimous with 99.5% of investor backing the union. Of the 22,683 voters, in facts, only 118 were opposed and 11 abstained. On the other hand, it was not as certain that also BPM investors would have supported the fusion. The approval eventually came with 7,314 votes in favor, 2,731 against and 142 abstentions, as reported by newspapers. Italy’s third largest lender, after Unicredit and Intesa Sanpaolo, is born. This was the biggest merger after Monte dei Paschi di Siena’s acquisition of Banca Antoveneta for €9 billion in 2007. The new bank will be called Banco BPM and will have market value of € 5.7 billion, assets estimated to be worth € 171 billion and more than 25,000 employees. Headquarters will be located in Milan and in Verona, the executive committee will be made of 19 members and chaired by Francesco Saviotti while Maurizio Faroni will be appointed general director and Giuseppe Castagna, CEO of BPM, will oversee the combined company.
Not only the banking sector, but also the government welcomes the deal as the latter was strongly supported and promoted by the Italian Prime Minister Matteo Renzi as a way to boost the economy. The Italian banking sector is currently facing severe difficulties as it can be seen from the €360 billion of doubtful loans, of which €200 classified as non-performing, accumulated in the recession of the latest years. In order to find the way to recovery, the government, together with regulators, has been pushing for consolidation and tie-ups among banks in order to boost profitability and increase strength. The Prime Minister’s administration holds therefore a big stake in the matter, especially in the face of the constitutional referendum of December.
As to the future performance of the newly created lender, the merger should allow for synergies of up to €460 million of which €320 millions should be only in costs. These will be achieved through 1,800 voluntary redundancies, together with the closing of 335 branches. Regulators also intervened in the deal imposing contingent conditions on Banco BPM. Due to the new bank’s size, the European surveillance imposed a rise in capital of €1 billion by Banco Popolare and an additional €500 millions to be raised through assets’ sales. As to future targets, the objective of the group is that of totaling €1.1 billion in profit for 2019. This merger is an opportunity for Italy to show its value, by citing the words of BPM CEO Giuseppe Castangna:” we made an effort to show that Italy is not a country that needs to be saved but one that can save itself”.
Fiammetta Galzerano
As expected, at Banco Popolare the result was almost unanimous with 99.5% of investor backing the union. Of the 22,683 voters, in facts, only 118 were opposed and 11 abstained. On the other hand, it was not as certain that also BPM investors would have supported the fusion. The approval eventually came with 7,314 votes in favor, 2,731 against and 142 abstentions, as reported by newspapers. Italy’s third largest lender, after Unicredit and Intesa Sanpaolo, is born. This was the biggest merger after Monte dei Paschi di Siena’s acquisition of Banca Antoveneta for €9 billion in 2007. The new bank will be called Banco BPM and will have market value of € 5.7 billion, assets estimated to be worth € 171 billion and more than 25,000 employees. Headquarters will be located in Milan and in Verona, the executive committee will be made of 19 members and chaired by Francesco Saviotti while Maurizio Faroni will be appointed general director and Giuseppe Castagna, CEO of BPM, will oversee the combined company.
Not only the banking sector, but also the government welcomes the deal as the latter was strongly supported and promoted by the Italian Prime Minister Matteo Renzi as a way to boost the economy. The Italian banking sector is currently facing severe difficulties as it can be seen from the €360 billion of doubtful loans, of which €200 classified as non-performing, accumulated in the recession of the latest years. In order to find the way to recovery, the government, together with regulators, has been pushing for consolidation and tie-ups among banks in order to boost profitability and increase strength. The Prime Minister’s administration holds therefore a big stake in the matter, especially in the face of the constitutional referendum of December.
As to the future performance of the newly created lender, the merger should allow for synergies of up to €460 million of which €320 millions should be only in costs. These will be achieved through 1,800 voluntary redundancies, together with the closing of 335 branches. Regulators also intervened in the deal imposing contingent conditions on Banco BPM. Due to the new bank’s size, the European surveillance imposed a rise in capital of €1 billion by Banco Popolare and an additional €500 millions to be raised through assets’ sales. As to future targets, the objective of the group is that of totaling €1.1 billion in profit for 2019. This merger is an opportunity for Italy to show its value, by citing the words of BPM CEO Giuseppe Castangna:” we made an effort to show that Italy is not a country that needs to be saved but one that can save itself”.
Fiammetta Galzerano