Intesa Sanpaolo Chief Executive Officer Carlo Messina expressed confidence that Italy’s competition watchdog will approve the bank’s €34 billion ($38 billion) takeover of Monte dei Paschi di Siena without imposing conditions that would materially undermine the deal’s economics, according to Reuters.
Speaking to analysts Tuesday after the lender reported stronger-than-expected quarterly earnings, Messina sought to ease concerns about the antitrust review, which is expected to conclude by the end of November.
The decision represents one of the final major regulatory obstacles to a transaction that would further consolidate Italy’s banking sector and strengthen Intesa’s position as the country’s largest lender.
Messina said he expected the financial impact of any remedies required by regulators to remain consistent with the assumptions underpinning Intesa’s offer.
A central issue for Italy’s competition authority is whether the acquisition would give Intesa excessive market power in certain regional banking markets.
The watchdog opened an investigation in September to assess the proposed merger’s effects on competition across banking and insurance services.
Its preliminary findings identified potential concerns involving deposit markets in 20 Italian provinces and lending to small businesses in 17 provinces, according to an earlier Reuters report. The authority also identified possible competition issues in household lending across a broader number of provinces.
To address those concerns, Intesa has already reached an agreement with insurer Unipol to dispose of approximately 635 Monte dei Paschi branches, representing roughly half the target bank’s network.
The branches would be incorporated into a banking business associated with BPER Banca, helping preserve competition in areas where the combined Intesa-Monte dei Paschi group would otherwise have a substantial presence.
Messina said Tuesday that Intesa does not anticipate being required to sell additional branches beyond those covered by the existing agreement.
However, should the competition authority demand further divestitures, the bank would seek a different purchaser rather than expand its arrangement with Unipol, according to Reuters.
Read more: Intesa Wins ECB Approval for $36 Billion Monte dei Paschi Takeover
UniCredit, Italy’s second-largest bank, has previously signaled interest in acquiring branches made available through consolidation.
Earlier Reuters reporting indicated that regulators could require the sale of as many as 50 additional branches, although no final decision has been announced.
Generali Holdings Add Complexity to Antitrust Assessment
The regulatory examination extends beyond traditional banking activities.
Intesa’s proposed acquisition would also give it an indirect holding of approximately 13% in Assicurazioni Generali, Italy’s largest insurer, through Monte dei Paschi’s ownership of Mediobanca.
That connection raises competition concerns because Intesa operates its own insurance business and competes with Generali, particularly in life insurance.
According to Reuters, the competition authority has identified potential risks arising from ownership and governance links between the two companies, including reduced competitive incentives and the possibility of sensitive information being exchanged.
The watchdog could consequently require behavioral remedies, such as restrictions governing Intesa’s influence over Generali or safeguards designed to maintain commercial independence between the businesses.
Unlike branch divestitures, which involve the disposal of physical banking assets, such measures could impose continuing restrictions on how Intesa manages its insurance interests.
The regulator has not yet disclosed the final conditions it may attach to the acquisition.
Tender Offer Expected to Begin in Late November
Intesa is preparing to launch its tender offer during the week of Nov. 23, subject to approval from Italian securities regulator Consob, which is expected early next week.
The European Central Bank already authorized Intesa to take control of Monte dei Paschi in October, clearing a separate regulatory requirement.
Under the transaction timetable, the tender offer can begin before the competition authority issues its final decision, allowing shareholders to evaluate any antitrust conditions before the acceptance period closes, Reuters reported.
The acquisition would mark a significant expansion for Intesa, which has largely avoided Italy’s recent banking consolidation wave because of concerns about its already substantial domestic market share.
The bank’s stronger financial performance provides additional support for its takeover ambitions. Intesa reported third-quarter net profit of €2.65 billion, exceeding analysts’ expectations of €2.5 billion, and raised its full-year earnings forecast to well above €10 billion.
Source: Reuters
