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.

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The core problem is a combination of rising energy costs and shaky consumer confidence. Oil prices have surged to an average of $103 per barrel, while natural gas, which powers homes and factories across Europe, is trading at €55 per megawatt-hour. These are not abstract numbers. When energy gets expensive, it costs more to produce goods, transport them, and heat homes. Businesses hold back on investment. Families spend less. That chain reaction is precisely what Italy is experiencing right now.

Consumer price inflation, the rate at which everyday prices rise, is expected to hit 2.6% this year as a direct result of these commodity spikes. To put that in plain terms, goods and services that cost €100 last year will cost around €102.60 this year. The bank projects inflation will ease below 2% by 2027 and 2028, provided that energy prices gradually fall as futures markets currently suggest.

Geopolitical instability, particularly the ongoing conflict in the Middle East, adds another layer of risk. In a worst-case scenario where hostilities drag on, Italy’s 2026 growth could shrink by a further 0.5 percentage points, and 2027 could lose a full percentage point off its forecast, a significant blow to an already fragile recovery.

There are some bright spots. The labour market remains relatively stable, wages are growing, and the bank expects a slow recovery to begin in early 2027 once inflationary pressure eases. However, Italian manufacturers face stiffening competition from cheaper Chinese goods, which limits their ability to grow.

The Banca d’Italia is urging policymakers to pursue productivity reforms and keep a close watch on global risks before conditions worsen further.

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The investment in the Canadian company will allow the Italian energy group to enter the critical minerals value chain, as European companies seek to reduce their dependence on China-sourced materials.

“The capital increase is aimed at supporting the development of the Matawinie Mine of high-quality natural graphite, a key feedstock for the battery sector, as well as other high-margin industrial segments. The Matawinie Mine forms the asset base for a vertically integrated project of natural graphite extraction and its refining at NMG’s Becancour Battery Material Plant,” ENI said.

“The investment in NMG is consistent with Eni’s strategy to diversify its supply chains. In particular, it enables Eni to enter the critical minerals value chain through a partnership with a leading company in the sector, while leveraging its distinctive technological know-how,” it added.

According to Eni, the transaction will also give it the option to negotiate exclusive supply agreements for graphite and other materials to support its gigafactory initiative to produce stationary lithium batteries in southern Italy.

The investment forms part of a USD 297 million capital increase at Nouveau Monde Graphite, alongside Canadian institutional investors ‌Canada Growth Fund and Investissement Quebec, as well as a public equity raise.

Following completion of the transaction, Eni will hold about 11.5% of Nouveau Monde Graphite’s share capital, in addition to gaining a seat on the company’s board.

The acquisition also serves one of the critical bedrocks for Eni’s goal to become a player in battery cell manufacturing for stationary energy storage systems. In September 2025, it started the development activities for a new lithium iron phosphate (LFP) battery cell factory through a joint venture (JV) called Eni Storage Systems.

Eni Storage Systems will construct a manufacturing hub at existing Eni facilities in Brindisi, southern Italy, with over 8GWh annual production capacity. The pre-construction work, which includes an initial engineering phase, along with the economic, financial and permitting assessments, is expected to be completed this year, after which the project will enter the execution stage.

Eni’s JV partner is FIB, a subsidiary of Italy’s Seri Industrial group, which owns several battery and materials companies. In October 2024, both ventures decided to cooperate in developing an industrial supply chain for LFP batteries, targeting the stationary battery energy storage system (BESS), along with the commercial and industrial (C&I) electric mobility sectors. The joint venture wants to capture more than a 10% share of the European stationary energy storage market.

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It was funded under the first call for proposals of Italy’s “National Recovery and Resilience Plan” and partly backed by the European Union’s “Next Generation EU Recovery Fund.”

The charging stations are spread across five regions, namely Campania, Lazio, Lombardy, Puglia, and Sicily, which cover around 21 provinces. The densest clusters are in the major cities, with Rome leading at 396 charging points, followed by Naples with 298, Milan with 227, Bari with 111, and Catania with 112.

Southern Italy boasts most of the charging stations, with around 40%. It’s important to note that the region had a weaker charging infrastructure historically and has now gotten a meaningful boost.

The new charging stations operate by providing an output of approximately 90 kilowatts of power per connector, allowing two electric vehicles to charge simultaneously and reducing driver wait times. Users can access this charging network through the “Enel On Your Way” app or card, or via 160 interoperable mobility service providers available in Italy and abroad. This system ensures that multiple EV brands can plug in without any difficulty.

The stations have POS terminals so customers can use their debit or credit card just like they would at a petrol station.

The first PNRR batch accounts for about 50% of the grants awarded so far. The three PNRR calls for urban charging infrastructure. PNRR stands for “Piano Nazionale di Ripresa e Resilienza,” which translates to National Recovery and Resilience Plan in English.

This plan is Italy’s effort to modernise its economy after the COVID-19 crisis through a huge package of grants and loans from the EU fund.

The PNRR pumps 191-194 billion euros into six big missions, which include digitalisation, green transition, and sustainable transport. Additionally, the funds also target educational research, inclusion, and healthcare.

The project funds various initiatives, including electric vehicle charging networks, renewable energy projects, school upgrades, and digital government reforms. PNRR also absorbs a large share of the cost. Companies bid for calls for proposals run by ministries.

The 3,730 EV charging points in Italy were partly financed under the first PNRR call for urban electric vehicle charging infrastructure, which is why you see PNRR linked to that rollout.

Enel is already working on an additional 200 charging points through the second and third PNRR calls, which will bring its total to around 5,000 charging points across nine regions, including Piedmont, Veneto, Emilia Romagna, and Tuscany.

For the business and retail sectors, EV expansion makes logistics easier while supporting the European nations’ energy transition goals.

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While sharing the update with the Saudi-based business media outlet Al-Eqtisadiah, on the sidelines of her participation in the events of the TOURISE 2025 forum in Riyadh, Santanche said, “Saudi Arabia has made significant progress in diversifying its tourism offerings and improving its infrastructure, making it an attractive destination for international visitors.”

While emphasising that tourism exchange programmes between the two countries could enhance cultural ties and encourage visitor flows, the Italian Minister mentioned that the European country is working with the national carrier ITA Airways to explore opportunities to enhance direct air connectivity with Saudi Arabia to accommodate tourist flows in both directions.

Relations between Saudi Arabia and Italy are witnessing steady growth, with the trade volume between the two countries reaching 966 million euro (USD 1.11 billion) in the first half of 2025. Tourist flows are increasing as well, as more than 322,000 Saudi nationals visited Italy in 2024, a 65% increase year-on-year, spending more than half a billion euros.

“Participation in the forum provided an opportunity for leading Italian companies to showcase what they have, creating favourable conditions for mutual investment and further enhancing relations between the two countries. We are actively promoting cooperation between Italy and Saudi Arabia. The participation of Italian companies in the ‘TOURISE’ initiative is an important step in this direction,” Santanche noted.

“Many Italian tourism companies are currently operating in Saudi Arabia and are ready to cooperate with their Saudi counterparts to develop new opportunities,” Santanche continued, while confirming that facilitating the entry of Gulf Cooperation Council (GCC) citizens, led by Saudis, into European Union (EU) countries is an important factor for increasing current tourism flows.

In April 2024, the European Commission adopted a historic decision to grant GCC citizens five-year multiple-entry Schengen visas. Saudis currently account for 60% of the Schengen visas granted to the Gulf countries combined, amounting to 470,888 visas, as previously reported by the EU press office in the Belgian capital Brussels to Al-Eqtisadiah.

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The agreement, which was signed in port, read that it would prepare a full feasibility study for biogas production units that process agricultural and animal waste and was attended by Petroleum Minister Karim Badawi, Local Development Minister and Acting Environment Minister Manal Awad, and Governor Mohab Habashi Khalil.

Andrea Marsanich, manager of Eni’s carbon offset solutions, and Yasser Abdullah, the chairman of the foundation’s board of trustees, attended the event along with Francesco Gaspari, managing director of AIOC, Eni’s Egyptian subsidiary.

The programme aligns with Eni’s four-year regional investment plan of €24 billion ($26.2 billion) in Algeria, Libya, and Egypt as part of the Mattei Plan of the Italian government to deepen energy and economic relations with Africa.

“Karim Badawi, Minister of Petroleum and Mineral Resources, stressed the importance of using this advanced technology in all governorates of the republic,” the Ministry of Petroleum and Mineral Resources wrote in an official post.

“He noted that the petroleum sector is ready to provide all necessary support and contribute effectively to the implementation of sustainable development projects, most notably biogas units, through sector companies spread across the country in cooperation with foreign petroleum companies operating in Egypt,” it added.

According to Badawi, this assistance is a crucial component of the industry’s corporate social responsibility to the communities surrounding petroleum operations, which aims to enhance resource efficiency and encourage local development.

Awad revealed that Egypt’s efforts to increase international collaboration and public-private partnerships to advance biogas technology, lower emissions, and produce sustainable energy from animal and agricultural waste are reflected in the agreement.

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The increase in his stake follows MPS’s unexpected 13.3 billion euro all-share offer to acquire Mediobanca in January 2025, which the Milanese merchant bank described as hostile. Francesco Caltagirone, a long-time investor in Mediobanca and Generali, also owns a 2% stake in BPM and a 53.3% stake in Anima Holding, a fund manager that Banco BPM is attempting to acquire.

Francesco Caltagirone, 81, has become an ally of Italy’s conservative government, which has repeatedly stated its intention to re-privatise the bailed-out lender in order to create a third major banking player in the country. In November 2024, when the Italian Treasury sold a portion of the Tuscan bank, Caltagirone purchased 32.5% of MPS. He later increased his investment to 5%.

The Treasury’s long-held preference to merge MPS with Banco BPM was thwarted when larger rival UniCredit made a hostile takeover offer for BPM. Before UniCredit’s aggressive move, BPM had acquired a 5% stake in MPS, increasing the likelihood of a future partnership.

Who Is Francesco Gaetano Caltagirone?

Francesco Gaetano Caltagirone was born in Rome, Italy, into a family with a long history in the construction sector. Exposed to the world of entrepreneurship at a young age, he began working with his brothers and a cousin to revive his late father’s construction company after completing his education. This initial exposure to the field prepared him for his subsequent rise to prominence as a business tycoon.

Caltagirone expanded his business interests and became more involved in significant infrastructure projects during the 1980s. One of his key early moves was purchasing Vianini Lavori, a company engaged in major civil engineering and construction. By supervising extensive infrastructure projects and contributing to Italy’s urban development, this acquisition helped him build a strong reputation in the construction sector. Vianini provided Caltagirone with invaluable experience in project management and expanded his influence in the industry.

During this time, Francesco Caltagirone also began diversifying his business interests outside of construction. In 1992, he acquired Cementir, an Italian cement company. Under his leadership, Cementir expanded and became one of the top cement producers in Italy and internationally. Cementir became one of the cornerstones of his business empire, and Caltagirone expanded its operations globally, solidifying his standing as a shrewd entrepreneur with a keen eye for investment opportunities across various industries.

In 1999, Francesco Caltagirone entered the publishing and media sectors, further diversifying his business endeavours. He founded the media conglomerate Caltagirone Editore, which grew into one of the largest newspaper publishers in Italy.

The group’s ownership of prominent newspapers such as Il Messaggero, Il Mattino, and Il Gazzettino cemented Caltagirone’s position as a major media force. His expansion into other sectors illustrates his strategic vision and ability to identify lucrative business opportunities.

Francesco Caltagirone’s career has extended beyond media and construction. Over time, he has accumulated significant holdings in a range of businesses, particularly in the insurance and financial sectors. His investments include Anima Holding, a leading asset management company in Italy, and Assicurazioni Generali, the country’s largest insurance provider.

He also holds substantial stakes in Banco BPM, one of Italy’s top financial institutions, demonstrating his influence in the banking sector. These investments highlight his versatility across industries and his ability to make calculated decisions that align with his corporate objectives.

Throughout his career, Caltagirone has consistently sought to grow his company through mergers, acquisitions, and strategic investments. His success and fortune are a result of his excellent timing and ability to identify profitable opportunities.

Francesco Caltagirone is among the wealthiest individuals in Italy, with an estimated net worth of USD 6.33 billion as of 2025. Through a combination of strategic diversification and visionary leadership, he has established a lasting legacy across multiple industries.

A Pivotal Figure In The Banking Industry

After Francesco Caltagirone bailed out Monte dei Paschi di Siena (MPS) and fund manager Anima Holding in 2024, MPS seized the opportunity in January 2025 by launching a surprise 13.3 billion euro all-share offer to acquire merchant bank Mediobanca, in which the Italian tycoon had become the second-largest investor over the past five years.

Caltagirone’s relationship with the Italian banking industry is also significant: he is the third-largest shareholder in Italy’s top insurer, Generali, with a 6.9% stake. Mediobanca is the largest investor in Generali, holding a 13% stake.

However, Caltagirone has been a critic of Mediobanca, accusing it of exerting excessive influence over Generali through its board and a governance system that allows outgoing directors to appoint their successors. As a long-standing investor and board member at Generali, Caltagirone, along with the late billionaire Leonardo Del Vecchio, unsuccessfully attempted to oust Mediobanca CEO Philippe Donnet in 2022.

Francesco Caltagirone maintains a cordial relationship with the Italian administration. Prime Minister Giorgia Meloni’s conservative government has approved contested corporate governance reforms championed by the tycoon. These reforms, however, have been criticised by fund managers for tightening the terms under which a company’s outgoing board can propose a list of successors.

Through his involvement with MPS, Caltagirone may now find himself in competition with UniCredit CEO Andrea Orcel, who, in November 2024, launched a buyout offer for Banco BPM, shortly after BPM had made its own bid for Anima and acquired a 5% stake in MPS.

A Reuters report stated, “The Treasury in Rome has long favoured combining BPM with MPS, which both partner with Anima, and building a core of long-term shareholders as it re-privatises the Siena-based bank it rescued in 2017. Before UniCredit upended Rome’s plans, Caltagirone, with a 5% stake in MPS, a 5.3% stake in Anima, and 2% of BPM, looked set to become a significant shareholder in the combined entity. In December 2024, Caltagirone named two representatives to the MPS board, including his son Alessandro.”

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Since September 2024, the Italian bank’s hefty stake in Germany’s Commerzbank has sparked a broad debate, leaving many wondering if this move is part of a larger push that raises concerns over competition and operational autonomy across Europe.

Is UniCredit creating a banking behemoth? Or, more worrisomely, is it undermining the independence of financial institutions in the region? This article explores these issues in depth, highlighting the critical events since September 2024 and what the takeover might mean for the European banking landscape.

The initial shockwave

In September 2024, UniCredit surprised market watchers and financial analysts alike when it announced its acquisition of a significant stake in Commerzbank, Germany’s second-largest lender. The move was a clear statement of intent, signalling UniCredit’s ambitions beyond the Italian banking landscape and aiming to expand its foothold into Germany, Europe’s largest economy.

Commerzbank, a historic institution in German finance with deep connections to the country’s Mittelstand, small and medium-sized enterprises, had long prided itself on its independence. Thus, the Italian financial giant’s purchase sent tremors not only through financial markets but also through German political circles. Many stakeholders questioned whether the move foreshadowed a full-scale takeover, and some went as far as to say that Germany’s economic sovereignty was being challenged.

The backdrop to this acquisition involves Germany’s banking challenges over the last decade. Commerzbank, like many other European banks, has struggled with low interest rates, regulatory pressures, and economic uncertainty.

Despite efforts at restructuring and cost-cutting, it remained vulnerable to takeover bids. By acquiring this stake, UniCredit effectively positioned itself as a potential saviour for Commerzbank, which in turn left the German institution questioning its ability to maintain autonomy.

In recent years, Germany’s banking sector has faced considerable turmoil, with both Deutsche Bank and Commerzbank struggling to maintain profitability amid challenging market conditions and evolving regulations.

The government has long been concerned about the stability of its banks, and there have been past discussions about merging Deutsche Bank and Commerzbank to create a national champion. However, such plans never came to fruition, leaving Commerzbank exposed to international acquisition attempts. UniCredit’s strategic move, therefore, filled this gap, offering a potential rescue plan for Commerzbank’s lagging performance while raising concerns about German economic sovereignty.

Commerzbank’s push for independence

In response to UniCredit’s stake acquisition, Commerzbank’s board of directors made a clear intention to retain operational independence. CEO Manfred Knoll has repeatedly emphasised that the bank will continue to operate autonomously, with its German business and customer base remaining intact. In his public statements, Knoll has insisted that the acquisition should be seen as a “strategic partnership” rather than a takeover.

However, the reality on the ground appears more complicated. UniCredit has already hinted at seeking increased influence within Commerzbank, which fuelled speculation that a full takeover may be on the horizon. Internal discussions at Commerzbank have reportedly turned to safeguarding its governance and operational decision-making—an effort to prevent excessive meddling by the Italian stakeholder.

Meanwhile, UniCredit’s CEO, Andrea Orcel, has consistently communicated his belief in “synergy potential” between the two banks, leaving many in doubt about how long Commerzbank’s independence can last under these circumstances.

The internal dynamics within Commerzbank have become increasingly tense. Reports suggest that several members of the management board are wary of UniCredit’s intentions, fearing that their influence might be eroded over time. Additionally, employee representatives on the board have expressed concerns about potential job losses and cultural shifts that could come with increased Italian oversight. Commerzbank’s history of supporting Germany’s Mittelstand businesses has always been a point of pride, and many fear that this focus could be diluted under UniCredit’s leadership.

Sovereignty at risk?

The acquisition of Commerzbank shares by UniCredit did not go unnoticed within German political circles. The takeover has sparked an intense debate among policymakers regarding Germany’s economic sovereignty. In a country where banking institutions are tightly integrated with industrial policy, the prospect of a foreign entity influencing a significant portion of the banking industry has made many politicians uneasy.

Germany’s Finance Minister, Lars Seidel, recently urged caution.

“Our financial institutions are vital to maintaining economic stability in Germany. We must be vigilant about foreign influence undermining our banks’ ability to serve our people and businesses,” Seidel remarked in an October press conference.

Representatives from Germany’s influential Greens and Social Democrats echoed this sentiment, stressing the importance of keeping domestic control over institutions that provide essential capital to the backbone of Germany’s economy—its SME sector.

The issue of foreign ownership has always been a sensitive topic in Germany. The country has a tradition of supporting local industries through close cooperation between banks, businesses, and the government. The Mittelstand—the backbone of Germany’s industrial prowess—relies heavily on accessible and flexible financial services from banks like Commerzbank. A takeover by a foreign bank like UniCredit could alter these relationships, leading to stricter lending criteria or different strategic priorities that might not align with the interests of German enterprises.

Critics of UniCredit’s stake in Commerzbank also include regulatory authorities. BaFin, Germany’s financial regulatory body, has indicated its intent to closely monitor the future moves of UniCredit.

BaFin’s spokesperson noted that “any further increase in ownership or influence by UniCredit will be scrutinised to ensure that German financial stability is not compromised.” This suggests that UniCredit’s ambitions might face stiff regulatory challenges if it attempts to acquire a controlling interest in Commerzbank.

Several members of the Bundestag have raised concerns about the implications of such a takeover for Germany’s long-term financial security. Some have proposed new legislation that would prevent foreign banks from acquiring controlling stakes in key German financial institutions without government approval. This legislative push underlines the discomfort within the political establishment regarding UniCredit’s growing influence over Commerzbank.

Market reactions and antitrust concerns

The market’s response to UniCredit’s stake acquisition has been mixed. While some investors see potential in the collaboration—with increased scale and synergies benefiting both entities—others worry that a hostile takeover may ultimately undermine Commerzbank’s position within the German economy. Commerzbank shares initially surged following the news, largely driven by speculation that UniCredit would soon make an official takeover bid.

However, subsequent statements from both banks have done little to clarify their intentions, leaving uncertainty lingering in the air. UniCredit has yet to file an official bid, but the market’s consensus indicates that it’s only a matter of time. Analysts have noted that UniCredit’s recent capital-raising measures and Orcel’s assertive public remarks suggest a strategy designed to absorb Commerzbank entirely.

This ambiguity has left the shareholders and analysts divided. On one side are those who believe that a merger could be highly beneficial, providing cost savings through shared operations, improved digital capabilities, and a more diversified revenue stream. On the other hand there are those who worry that such a merger could create significant redundancies, particularly in Germany, leading to job losses and discontent among employees and clients.

In addition, the uncertainty has affected Commerzbank’s relationships with some of its major corporate clients. Reports indicate that several large clients are evaluating their options, concerned about the possible changes in management or lending practices if UniCredit takes full control. This apprehension is understandable given UniCredit’s reputation for aggressive restructuring in previous acquisitions, which often included significant cost-cutting measures.

UniCredit’s expansionist drive has also drawn scrutiny from European Union anti-trust authorities, raising questions about potential impact on competition within the banking sector. Critics argue that UniCredit’s push into Germany, if successful, could reduce competition and weaken financial stability, as the consolidation of major banking institutions risks creating entities that are “too big to fail.”

Moreover, European anti-trust regulators are reportedly closely watching developments. The EU’s Competition Commissioner, Margrethe Vestager, has previously expressed concerns about increasing concentration within the banking sector, fearing that a lack of competition could reduce the diversity of financial products available to European consumers and businesses. If UniCredit were to take control of Commerzbank, it would further entrench itself as a European banking powerhouse—potentially giving it undue influence in setting loan terms, business financing, and regulatory lobbying.

The European Central Bank (ECB) has also expressed concerns, highlighting that cross-border consolidation could introduce systemic risks. A consolidated banking giant might become challenging for regulators to manage during crises, due to the varying regulatory environments and economic conditions across Europe.

ECB officials have been careful in their statements, emphasising that while consolidation could lead to greater efficiencies, it could also create complexities that are challenging to resolve during times of economic stress.

There is also a broader concern that cross-border banking takeovers could diminish national resilience to financial crises. A UniCredit-Commerzbank merger, for example, might lead to a situation in which German savings are being used to bail out Italian loans or vice versa—a scenario that could prove politically toxic and economically damaging in times of crisis. This is particularly concerning given the divergence in economic performance between Italy and Germany in recent years, with Italy’s economy remaining more fragile and prone to shocks.

Banco BPM in crosshairs

At the same time that UniCredit has been making waves in Germany, the Italian bank has also launched a 10 billion euro ($10.5 billion) takeover bid for its domestic rival, Banco BPM.

Banco BPM has identified the offer as “unsolicited,” indicating that it is not eager to entertain UniCredit’s advances.

The Banco BPM bid has further contributed to fears of monopolistic ambitions. Industry insiders speculate that the Italian lender is actively working to resist UniCredit’s efforts, but its capacity to do so remains in question. Analysts point out that Banco BPM’s options are limited due to a competitive Italian banking landscape that has been suffering from the same macroeconomic challenges as Commerzbank—making it more vulnerable to an aggressive bidder like UniCredit.

For UniCredit, the Banco BPM bid represents a continuation of its growth strategy, focusing on creating a banking giant that spans multiple European markets. If successful, the merger would become one of Italy’s largest banking institutions, giving UniCredit a dominant position in domestic and international markets.

However, the unsolicited nature of the bid has raised eyebrows, with critics arguing that UniCredit is pursuing an expansion strategy that disregards the wishes of existing stakeholders.

The simultaneous bids for Commerzbank and Banco BPM paint a picture of a UniCredit with grand ambitions. But with these ambitions come questions of overreach. A UniCredit that successfully absorbs both Commerzbank and Banco BPM could potentially control large segments of the European banking landscape, raising further anti-trust concerns. Are we witnessing the birth of a banking giant that could stifle competition, or will the regulatory framework put a leash on UniCredit’s ambitions?

Stakeholder perspectives

As UniCredit attempts to expand its footprint, there are many stakeholders watching anxiously. Among them are Commerzbank’s corporate clients, particularly German SMEs, who are apprehensive about the potential consequences of a UniCredit-controlled Commerzbank.

The concern is that an Italian management approach might not fully align with the needs and expectations of these German companies. Many of these businesses rely on relationship-based banking, something they fear might be lost in a takeover driven by synergies and cost-cutting.

Employees, too, are worried about job security. Both Commerzbank and UniCredit have undergone rounds of layoffs in recent years, as European banks have struggled to improve profitability in an era of low interest rates.

The fear is that a merger would lead to further job losses, particularly in overlapping segments such as retail banking and back-office operations. Labour unions in both Germany and Italy have already voiced their opposition to a potential takeover, calling for guarantees of job security and transparent communication.

The prospect of job cuts is particularly worrying for Commerzbank employees. Labour unions have organised protests and petitioned management to provide assurances regarding employment security.

In a country like Germany, where labour laws are robust and unions have significant influence, any potential layoffs could face serious opposition, potentially complicating UniCredit’s integration plans. Similar concerns have been voiced by Banco BPM employees in Italy, who fear that UniCredit’s history of cost-cutting could spell trouble for their job security.

Competitors, meanwhile, are wary of UniCredit’s strategy. If the Italian lender succeeds in creating a cross-border banking conglomerate, it would potentially dwarf most of its European rivals, creating an imbalance in the competitive landscape.

Deutsche Bank, in particular, has expressed concerns that a UniCredit-Commerzbank combination could lead to distorted market dynamics in Germany, where Commerzbank’s role in financing SMEs is critical to the economy’s health.

Other European banks are watching the developments closely. The potential creation of a mega-bank could prompt a wave of consolidations, as other institutions scramble to maintain their competitive edge. Smaller regional banks, in particular, are concerned that they could be pushed out of the market entirely, as larger entities with more extensive resources and wider networks dominate the playing field.

Is UniCredit’s growth strategy sustainable?

UniCredit’s recent manoeuvres have been ambitious, but they raise questions about the sustainability of such aggressive expansion. Historically, European banking mergers have been fraught with difficulty, often hampered by cultural differences, regulatory hurdles, and the practical challenges of merging operational systems. UniCredit itself has struggled with integrating previous acquisitions, and a merger with Commerzbank would be no less challenging.

Furthermore, UniCredit’s push to consolidate power comes at a time when the European economy faces headwinds, including sluggish growth and rising geopolitical tensions. With interest rates inching higher and inflationary pressures mounting, the path to profitability for European banks remains narrow.

Some analysts believe that UniCredit’s aggressive strategy could backfire, particularly if economic conditions worsen. The complexity of integrating multiple institutions, coupled with the regulatory scrutiny such moves invite, could well create an unsustainable burden.

Cultural integration poses another significant challenge. Commerzbank’s culture, which has traditionally focused on maintaining close relationships with German SMEs and supporting local economic growth, may clash with UniCredit’s more international and cost-focused approach. Such cultural differences have derailed banking mergers in the past, and UniCredit will need to tread carefully to ensure that the value of Commerzbank’s client relationships is not eroded in the process.

UniCredit’s recent capital-raising measures indicate that it is preparing for a significant outlay, but the risk of over-leveraging remains. The banking sector is still haunted by the memory of the 2008 financial crisis, and regulators will be keen to ensure that any merger does not create systemic risks. If UniCredit’s growth strategy proves unsustainable, it could have far-reaching consequences not only for the bank itself but also for the broader European financial system.

A new dawn for European banking?

The unfolding story of UniCredit’s stake acquisition in Commerzbank—as well as its bid for Banco BPM—is emblematic of broader challenges and questions facing the European banking sector today. On the one hand, consolidation may offer benefits such as improved efficiencies, cost savings, and a stronger balance sheet to compete with the giants of Wall Street. On the other hand, the spectre of reduced competition and the potential loss of autonomy for key national institutions looms large.

The European Commission will likely be at the centre of this debate in the coming months. Regulators will need to weigh the benefits of consolidation against the potential risks to competition, financial stability, and national sovereignty. The stakes are high: if UniCredit is allowed to proceed unimpeded, it could set a precedent for other banks, leading to a wave of consolidation that might leave Europe with just a handful of mega-banks controlling the majority of assets and lending.

For now, UniCredit has sent a clear signal—it’s intent on becoming a leading player on the European stage, regardless of the obstacles. Whether this leads to a more robust European banking sector or a fragile one dominated by institutions that are “too big to fail,” remains to be seen.

If the ambitions of UniCredit succeed, it could herald a new era of European banking, marked by fewer but more formidable players capable of competing on the global stage. But with this potential comes a real and pressing risk: these new banking behemoths may prioritise profitability over the diverse needs of the European economy. As the story unfolds, the key question remains—will the push for growth lead to a stronger, more unified banking landscape, or will it undermine the very competition that has driven Europe’s financial sector for decades?

The post Is UniCredit building a European banking empire? appeared first on International Finance.

CEO Giuseppe Castagna stated that the UniCredit bid would result in the loss of over 6,000 jobs at Banco BPM, despite UniCredit’s plans to reduce expenses by more than a third.

“We are a big autonomous bank, an Italian bank with a strong vocation of being close to our regions and to the small and medium-sized companies that make up the backbone of our country,” Giuseppe Castagna said.

Banco BPM has rejected UniCredit’s 10-billion-euro (USD 101.5 billion) offer, claiming it undervalued the bank, bound it to strategic agreements, and increased shareholder risk.

The second-biggest bank in Italy, UniCredit, has a stake in Commerzbank in Germany, which was considered its top acquisition target. Investors were taken aback by its sudden shift from Germany to Italy with the latest acquisition attempt directed at Banco BPM, which seemed to catch the Italian government off guard.

The Italian government, which had advanced plans for a merger of BPM with rival Monte dei Paschi di Siena to create a third force in Italian banking behind UniCredit and Intesa Sanpaolo, is also thrown for a loop by UniCredit’s move.

UniCredit CEO Andrea Orcel is now planning to meet with Credit Agricole management to discuss the future of the lenders’ partnerships after the Italian bank offered to buy rival Banco BPM, Reuters reported.

“Credit Agricole is crucial to the success of Orcel’s bid for his smaller peer because it owns 9% of Banco BPM and because UniCredit has an agreement to sell funds distributed by Amundi, which Credit Agricole owns, to its clients in Italy,” the media house stated.

UniCredit’s bid for Banco BPM has also managed to catch the attention of the Italian banking sector’s main union, as it raised concerns about the potential impact of the deal on jobs.

“There is great concern about the employment fallout that could result from the deal. The numbers circulated so far are worrying and call for deep thought,” FABI union said in a statement, while adding that the offer was a “market transaction, in a phase of radical changes in the banking sector, both at a national and European level”.

Despite UniCredit’s surprise bid for Banco BPM’s acquisition is creating some sort of discomfort in the Italian banking circle, as per Reuters, the venture was always on the wish list of UniCredit CEO Andrea Orcel (a veteran dealmaker himself).

Even though many are terming UniCredit’s 10 billion euro (USD 11 billion) all-share offer for Banco BPM as an “Unsolicited One,” Orcel justified the move to the investors, by stating that he had to act because of an acceleration in Italy’s financial sector consolidation, where the government in November 2024 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.

Buying Banco BPM will 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 2024, Intesa had 949 billion euros in assets, followed by UniCredit (for which Italy is the main market among the 13 where it operates) at 800 billion euros and Banco BPM at 195 billion euros.

“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,” Reuters reported.

After a merger, the combined entity’s market share will 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.

Both UniCredit and Banco BPM want to grow net fees and be more like Intesa, where fees exceed 40% of overall revenues thanks to its in-house insurance and asset management. UniCredit is bringing in-house its life insurance operations, something which Banco BPM has already done.

As per Orcel, cost savings from a deal with BPM could reach 900 million euros a year before taxes and 800 million after taxes, and would only minimally affect the branch network. Additional revenues are estimated at 300 million euros a year. The return on investment for UniCredit from a deal is expected to surpass 15%, with earnings per share increasing by a “high single-digit” percentage within a couple of years.

The post Banco BPM CEO Giuseppe Castagna boss warns of job losses in UniCredit deal appeared first on International Finance.

Speaking to the influential Italian business group Confindustria recently, the Prime Minister referred to the “forced conversion” of the whole EU market for new light vehicle sales to electric propulsion within ten years as “not very wise as a plan.”

Giorgia Meloni denounced the “disastrous effects” of the European “Green Deal” and its “ideological approach,” saying that “the green transition cannot mean losing thousands of jobs, or demolishing entire industrial segments that provide wealth and employment.”

Her harsh criticism comes as calls for an early, urgent review of the European Union’s automobile pollution regulations, which effectively equate to a prohibition on the sale of new combustion engines by 2035, are intensifying from Italy, Germany, and certain eastern European nations like the Czech Republic, which produce vehicle components.

Adopted in 2023, the regulations represent one of the most contentious aspects of the bloc’s ambitious Green Deal climate policy. Automakers and the governments of countries that produce cars are requesting a postponement of the prohibition or additional latitude in the regulations, including allowances for using carbon-neutral e-fuels.

The liberal Free Democratic Party member Volker Wissing, Germany’s transport minister, warned at a transportation industry trade show this week that “Europe is losing credibility because it is setting targets that it can’t even meet itself.”

While acknowledging the importance of goals, Wissing suggested they should be reasonable and “possible to implement in practice.”

Conservative parliamentarians, including those from Ursula von der Leyen’s own European People’s Party, have asked Brussels to reconsider the restriction when it comes up for revision in 2026.

Italy is even attempting to move up the review process to the following year, citing a worsening crisis in its auto industry due to a decline in production and consumer demand for electric cars.

The number of passenger cars produced in Italy in the first seven months of 2024 was merely 225.000, a decrease of 35.5% from the same period the previous year, according to the National Auto Industry Supply Chain Association, which represents the country’s auto and component manufacturers.

“The Green Deal in its original form has not succeeded,” Italian Industry Minister Adolfo Urso declared at a recent business gathering, as he added, “The car industry in Europe is crumbling. We cannot wait another two years to make decisions.”

The historic plant in Turin, home of Stellantis, the worldwide corporation that owns the Fiat brand and is the largest automaker in Italy, will be temporarily suspending production of electric Fiat 500s due to low demand.

Rather than dictating a mandatory transition to electric vehicles, Giorgia Meloni contended in her speech to the business community that the EU ought to have adhered to the concept of technological neutrality, letting each member state determine its strategies for reducing CO2 emissions.

In support of her claim that “we do not own the raw materials and do not control the value chain” for EVs, she stated, “We want to safeguard European industrial capacity.”

Giorgia Meloni declared, “I promise to keep working hard to make these corrections. With common sense, we want to reduce polluting emissions and utilise all available technology to do so, potentially saving tens of thousands of jobs along the way.”

In an interview with the Financial Times, Teresa Ribera, the European Union’s likely next executive vice president in charge of green policy, claimed that the establishment of the 2035 phaseout date for combustion engines had provided the European auto industry with the “stability and reliability” required to develop the electric vehicle ecosystem.

In September 2024, the automotive trade association ACEA released a presentation stating that, in 2023, “EU car sales grew for the first time since 2019 with battery-electric cars virtually double their market share.”

However, the latest sales numbers now cast a shadow on the continent’s EV dreams. New car sales in the European Union fell 18.3% in August to their lowest in three years, dragged by double-digit losses in major markets Germany, France and Italy.

Sales of fully electric cars slumped 43.9% in August, falling for the fourth consecutive month, as the bloc’s biggest electric vehicle markets Germany and France recorded drops of 68.8% and 33.1% respectively, the European Automobile Manufacturers Association (ACEA) said.

Car sales in Europe have now dropped well below pre-COVID-19 levels, with carmakers such as Volkswagen warning that the trend might not change in the foreseeable future. EV sales growth too has slowed, in part due to diverging policies on green incentives, while regulators have imposed hefty tariffs to try to keep cheap Chinese cars from flooding the continent’s markets.

Sales of battery electric and plug-in cars fell by 43.9% and 22.3% respectively in August, while those of hybrid-electric cars rose 6.6% to a market share of 31.3%. Registrations at Europe’s three largest carmakers Volkswagen, Stellantis and Renault all fell from a year earlier, by 14.8%, 29.5% and 13.9%, respectively. Sales at Tesla (TSLA.O), dropped 43.2%, and those for China’s SAIC Motor were down 27.5%.

The market share of hybrid electric cars has increased in the European Union in recent months, as buyers see them as an affordable compromise between all-combustion and all-electric.

To inject new stimulus into the market, Germany agreed in September 2024 on tax deductions of up to 40% for companies on their sales of electric cars, after a 2023 campaign ending a subsidy programme designed to help speed up the green transition.

The post IF Insights: Amid plummeting sales, European Union’s EV dreams get ‘Italian Reality Check’ appeared first on International Finance.