MILAN (WS News) – Italy’s third-largest bank Banco BPM has been on UniCredit CEO and veteran dealmaker Andrea Orcel’s wish list since he took up his current role in 2021.
After aborting previous bids, Orcel on Monday launched an unsolicited 10 billion euro ($11 billion) all-share offer for Banco BPM, priced just 0.5% above BPM’s closing price on Friday.
Orcel told investors he had to act because of an acceleration in Italy’s financial sector consolidation, where the government this month offloaded a 15% stake in Monte dei Paschi di Siena (MPS) potentially paving the way for an eventual tie-up between MPS and Banco BPM.
Here is a summary of why Banco BPM has been long seen as the perfect domestic target for UniCredit.
BULKING UP
Buying Banco BPM would help Orcel reduce the gap with Intesa Sanpaolo which in 2020 leapfrogged UniCredit to become Italy’s biggest bank by assets by buying northern mid-tier bank UBI and securing more than a fifth of the domestic market.
At the end of September, Intesa, which is focused on Italy, had 949 billion euros in assets, UniCredit, for which Italy is the main market among 13 where it operates, 800 billion euros and Banco BPM 195 billion euros.
NORTHERN ROOTS
Banco BPM has three-quarters of its more than 1,400 branches in Italy’s richer north. It accounts for 13% of all bank branches in Lombardy, where UniCredit is weak despite having its headquarters in Italy’s financial and fashion capital Milan.
Additionally, Banco BPM has an 8% market share in Veneto, another wealthy region in the northeast, and 10% in Turin’s Piedmont’s region.
COMBINED MARKET STRENGTH
After a merger, the combined entity’s market share would reach 20% in several economically crucial regions, such as Lombardy (24%), Veneto (21%), and Emilia-Romagna (21%), without creating dominance in any specific province, calculations by Italian broker Intermonte showed.
