Italian mid-sized lender Banco BPM has abandoned efforts to seek a merger with rival Banca Monte dei Paschi di Siena (MPS), months after stepping in to help it fend off a takeover bid by bigger peer Intesa Sanpaolo.
Banco BPM’s retreat came after its main shareholder, France’s Credit Agricole, gave a downvote to the deal, stating it would not bring any significant value, given the fact that it was a tie-up between the two mid-sized banks.
Credit Agricole CEO Olivier Gavalda, whose venture is Banco BPM’s largest shareholder with a 29.3% stake, also stated that he wasn’t approached about any project involving MPS and Banco BPM and is not aware of “any concrete proposal.”
“At this stage, it is very difficult to see how a combination between MPS and Banco BPM can be value-accretive for Banco BPM shareholders,” Gavalda said, while stating that Credit Agricole, which has four seats on Banco BPM’s board, would assess any proposal based on its strategic merits, execution risks and ability to create long-term value. He even preferred to combine Agricole’s own Italian unit with Banco BPM.
Post Gavalda’s remarks, BPM’s board decided to halt any discussions with MPS over a potential merger given no definitive progress had been made since it sought merger talks.
MPS, reacting to the news, said it had taken note of the position of both BPM and Credit Agricole and agreed to end any preliminary consultations, which it saw as necessary before proper negotiations.
“We would continue to assess all strategic options in the best interest of its shareholders, employees, and clients,” it said further.
The development also comes as a setback for the Italian government, which rescued MPS in 2017, as it promoted a merger with BPM that would combine the two mid-sized banks and create a third large player alongside Intesa and UniCredit.
The government’s efforts, however, prompted UniCredit to step in with a bid for BPM in late 2024, which subsequently failed. UniCredit was the largest bank in Italy until Intesa in 2020 completed a hostile acquisition of a second-tier bank.
While UniCredit CEO Andrea Orcel has remained focused on a takeover of Germany’s Commerzbank, taking advantage of the situation, Intesa, in June 2026, put forward an unsolicited 35 billion euro merger offer for MPS.
Intesa, which holds a one-fifth market share in Italian banking, had steered clear of a first round of banking consolidation in Italy. That wave in 2025 culminated in Monte dei Paschi buying merchant bank Mediobanca and becoming the main investor in the sector’s most prized asset: insurer Generali.
MPS has said Intesa’s offer was insufficient, without formally rejecting it. As per the reports, the Tuscany-based bank would pursue an alternative to Intesa’s proposed deal only if it created more value for shareholders, with the 3 billion euro cash component in Intesa’s bid setting a benchmark.
Intesa’s cash-and-share offer for MPS that would create the euro zone’s second-largest listed lender by market value, saw the largest Italian bank offering 1.6 of its own shares plus 1 euro in cash for each MPS share tendered at a 12.5% premium to the latter’s shares’ closing price on the last trading day before the bid announcement.
“The premium appears lower than the average level of premia observed in comparable voluntary public tender and/or exchange offers in the Italian banking sector, equal to approximately 30%,” MPS said on July 16.
“The MPS board also expressed doubts about annual pre-tax synergies of 2.9 billion euro Intesa projected as part of its bid, composed of both cost savings and revenue enhancement. They ‘appear high relative to the economic scale’ of the MPS assets in the deal,” it said.
To address competition concerns, Intesa has agreed to sell to insurer Unipol, a banking business comprising around 635 MPS branches, roughly half the network, and the lender’s central offices in Siena.
Unipol, the largest investor in BPER Banca, will then merge those assets with BPER to create a bank operating under the Banca Monte dei Paschi name.
However, MPS still sees significant uncertainty remaining over antitrust reviews, including possible remedies regulators could require and assessments linked to Intesa’s acquisition of the Generali stake through the MPS deal.
However, Intesa has refused to give in to MPS’ demands, with its CEO Carlo Messina stating, “There is zero possibility that we will increase our price for Monte dei Paschi.”
Messina further hit back at his merger target by stating that MPS traded at about 15 times earnings, compared with about 11 times for Intesa and UniCredit.