Italian banking sector is in the news with Intesa Sanpaolo, one of Europe’s private banking giants, launching a public purchase and exchange offer (OPAS) worth €30.6 billion for Banca Monte dei Paschi di Siena (also known as BMPS or MPS). The deal eyes the creation of Europe’s second-largest banking group.
MPS is one of the world’s oldest banks, tracing its origins to 1472.
In December 2025, MPS completed the acquisition of Mediobanca, which controls part of insurance giant Generali, after months of bids and negotiations that involved Banco BPM and UniCredit. Apart from Intesa, Banco BPM too is interested in MPS.
The aim of Banco BPM, along with its principal shareholder French group Credit Agricole, is to create a major banking group capable of breaking the current de facto duopoly in the Italian market of Intesa Sanpaolo and UniCredit.
The great Italian banking opera
There are three actors in the theatre. First, we have Intesa Sanpaolo, Italy’s largest banking group by assets. It is also one of the biggest banks in the eurozone, serving around 14 million customers across Italy, while having an established international network spanning more than 25 countries. The lender has built a dominant retail and commercial banking franchise, apart from being a trusted name in wealth management, private banking, insurance and corporate banking.
By 2025-end, the group managed around €1.5 trillion in customer financial assets, including €562 billion in assets under management. Intesa, financially, has remained one of Europe’s strongest banks, reporting a record net profit of €9.3 billion last year, a Common Equity Tier 1 (CET1) ratio of 13.9%, and a return on equity (ROE) of 18%, consolidating further its robust capital position, profitability, strong balance sheet, and diversified business model.
Formed in 2007 through the merger of Banca Intesa and Sanpaolo IMI, by 2025, the bank had secured the 40th rank in the Fortune Global 500, in terms of total assets. On Fortune 500 Europe, it is ranked 63rd currently, apart from being the 255th largest corporation.
The net profit of €9.3 billion made 2025 the best year in Intesa’s operational history, aided by tailwinds like record-high commissions, insurance income, best-in-class cost/income ratio, lowest-ever stock, and inflows of non-performing loans (with bad loans reset to near zero), strong capital growth, and significant value creation for stakeholders.
Along with acquiring MPS, the group is also eyeing to deliver €10 billion in net income in 2026.
On the other side, Banco BPM is Italy’s third-largest banking group, with total assets of around €206 billion as of early 2025. Formed through the 2017 merger of Banco Popolare and Banca Popolare di Milano, the venture operates 1,363 branches nationwide, with €129.1 billion in loans, and €109.9 billion in customer deposits at the end of 2025.
Banco BPM has repeatedly featured in merger speculation involving larger domestic and international lenders, apart from seeking greater scale through acquisitions and strategic combinations to strengthen its competitive position against larger rivals like Intesa Sanpaolo and UniCredit.
Where the bidding war stands now
In the first week of June, Intesa Sanpaolo put forward an ‘unsolicited’ cash-and-share offer worth €30.6 billion ($35 billion) for MPS, to checkmate Banco BPM’s merger of equals proposal for the venture. Intesa’s goal has been clear: to create the eurozone’s second-largest listed banking group by market value after Spain’s Banco Santander.
The combined group that will emerge after MPS’ assimilation into Intesa will have a market capitalisation of €126 billion, and a net income objective of €16 billion in 2029. To address potential anti-trust issues, Intesa has agreed with insurer Unipol to dispose of a banking business, including 635 MPS branches, or about half of the lender’s retail network, along with the MPS brand, should the acquisition succeed. The arrangement aims to retain MPS as a retail banking name.
Banco BPM, on the other hand, has approached MPS with the vision of creating a combined entity worth €50 billion ($58 billion). A merger between the two would end up creating Italy’s second-largest bank, ahead of UniCredit.
Intesa, meanwhile, in its bid proposal, has informed MPS about keeping Mediobanca and its brand, along with some 625 MPS branches and a limited portion of MPS central structures, together accounting for roughly 80% of MPS and Mediobanca’s 2025 net income.
As per Intesa, the merged group would hold about €1,700 billion in customer financial assets, including more than €250 billion from the retained MPS perimeter, apart from serving more than 27 million customers, with around 20 million of them being in Italy.
Banco BPM, outlining its own proposal, said the takeover would expand the strategic options linked to MPS’ holding in Assicurazioni Generali, and would result in a pro-forma CET1 ratio of around 15%, value creation of at least €5.5 billion, and earnings per share accretion of more than 10%.
Banco BPM became an investor in MPS in November 2024, when the Italian government completed reprivatisation of MPS, and brought in domestic investors as core shareholders.
Intesa’s game is much bigger here. By acquiring MPS, the venture wants to become Italy’s replica of UBS, strengthening its European leadership in wealth management and protection and advisory. Intesa’s wealth management and protection businesses generated 46%, or €12.54 billion, of the bank’s total revenue in 2025. A successful bid would create a combined entity with annual revenue of around €33 billion and profit of €11.3 billion.
All eyes on Rome
As per Intesa, the Italian government should assess any bid by BPM for BMPS under its ‘Golden Power’ legislation due to French banking giant Credit Agricole SA’s 22.9% stake in BPM, given that UniCredit SpA’s 2025 bid for BPM was blocked under the Giorgia Meloni regime.
Economy Minister Giancarlo Giorgetti has made his administration’s stance clear: to be a neutral party regarding merger and acquisition moves targeting MPS. He also said that a share placement through an accelerated bookbuilding procedure (ABB) would be ‘one of the best solutions’ to cut Italy’s residual 5% stake in MPS. As per him, whenever MPS’ takeover starts, the European country’s treasury would respond by selling its shareholding.
“Despite its neutrality, the government does not rule out setting conditions on the terms of any deal under golden power rules aimed at shielding strategic assets. Italy’s commitment is to divest its stake in MPS, but this step must be taken under the best market conditions to ensure that the investment made over time yields the maximum return,” the minister remarked.
The Meloni government currently owns 4.86% of MPS after rescuing the bank in 2017 through a costly bailout agreed with European Union authorities, and later returning it into private hands through three stake placements starting in late 2023.
In 2017, MPS almost collapsed due to years of mounting bad loans, weak profitability, and repeated capital shortfalls following the 2008 global financial crisis. The Italian government stepped in with a €5.4 billion recapitalisation under the European Union’s ‘precautionary recapitalisation’ framework, becoming the bank’s majority shareholder to prevent a disorderly failure.
The rescue came with strict restructuring conditions imposed by European authorities. MPS was required to dramatically reduce costs by cutting thousands of jobs, streamline its branch network, dispose of non-core assets, and aggressively clean up its balance sheet by selling billions of euros worth of non-performing loans, in order to become a leaner and financially stronger institution.
Italy’s treasury had to take ownership of 68% of MPS. It has since gradually reduced its holding through market placements as part of its commitment to re-privatise the bank under EU rules. There were more than 4,000 job cuts to streamline its operations, and significantly reduce its cost base. However, the real deal was the balance-sheet cleanup. MPS ended up transferring around €24 billion of gross non-performing loans (NPLs) in one of Europe’s largest bad-loan disposals, dramatically improving its asset quality.
Things changed for good in 2023, when MPS earned €1.95 billion in net profit, its highest in well over a decade. It followed the feat with a 41.2% year-on-year increase in Q1 2024 profit to €332.7 million. In the same timeframe, MPS reported a Common Equity Tier 1 (CET1) ratio of 17.9%, well above regulatory minimums.
Since then, the venture has been displaying steady profitability, by rebuilding its capital position, apart from significantly improving the quality of its loan book. Both Banco and Intesa have been drawn to advantages like MPS’ extensive retail customer base, nationwide branch network, and strong deposit franchise, which provide stable funding and valuable cross-selling opportunities.
In Q1 2026, the venture’s lean operational model helped it to absorb rival Mediobanca and register 3% revenue growth. Mediobanca’s wealth management division was churning out net outflows of €1.1 billion ($1.3 billion) during the quarter.
MPS, which has already started selling Mediobanca products and lowered costs by renegotiating some supply contracts, reported Q1 net profit of €521 million , beating the analysts’ expectations of €511 million. Revenue totalled €1.96 billion, against a forecast of €1.92 billion, with Mediobanca’s contribution at about €925 million.
Won’t be free of hurdles
A merger between MPS and Intesa/Banco would significantly increase market concentration in several Italian regions, particularly in retail banking, SME lending and deposits. Despite the government announcing that it would pursue a ‘neutral stance’, there is no guarantee that the regulators, be it in Rome or in the European Union (EU), won’t step in.
In that case, MPS’ suitor needs to sell branches, customer portfolios or business units in regions where the combined market share becomes excessive. Scenario tests will be done, which will assess situations like reduced competition, along with the chances of customers facing higher borrowing costs or fewer banking choices.
Expect resistance from the Italian labour unions, as bank mergers in the European country typically involve branch closures, IT integration, overlapping back-office functions, and massive job cuts.
An acquisition by Intesa, already Italy’s largest bank, may end up attracting much tougher anti-trust scrutiny than a bid from Banco BPM because the combined group would command an even larger share of Italian deposits, loans and branches. Banco still has an ace up its sleeve. It can tell the regulators that acquiring MPS would create a stronger challenger to Intesa, and other major Italian and European banks, while still preserving competition in the market.