The highly politicized tussle over Italy’s financial system took another twist on Monday as Milan-based Mediobanca struck back against a government-backed bid from Monte dei Paschi di Siena.
The investment bank, which has played kingmaker and all-round power broker in countless Italian corporate battles, said on Monday it wants to acquire the banking arm of insurer Assicurazioni Generali to create an “Italian champion” in wealth management, using its current 13.1 percent stake in Generali to finance the acquisition.
The proposal values Banca Generali at €6.3 billion, some 6 percent more than its closing price on Friday in Milan. In a nod to Rome, where the government has expressed concern about increasing foreign influence in the financial sector, Mediobanca said it would create an “Italian champion” in wealth management.
Mediobanca is itself currently the subject of a hostile bid from Monte dei Paschi di Siena that enjoys the support of influential figures in the right-wing government in Rome. The government has indicated it wants to build MPS, which is still partly state-owned, into a force capable of competing with the country‘s two biggest banking groups, Intesa Sanpaolo and UniCredit.
Mediobanca CEO Alberto Nagel told reporters in a press conference on Monday he views its alternative vision as “much more valid” from a strategic perspective than MPS’s bid.
Mediobanca’s move will need approval from the Italian government under its “golden power” rules, (which are typically used to screen foreign investment), Nagel told reporters. However, he argued that there should be no problems on this score, as it would create “a national leader in asset management,” which is “exactly” what Prime Minister Giorgia Meloni has been advocating for. Mediobanca said it expects the deal to close as soon as October.
The developments come barely a week after Rome used its ‘golden power’ to obstruct UniCredit’s planned takeover of Milan-based Banco BPM, which some in government would reportedly prefer to see merged with MPS. UniCredit said last week that the conditions imposed by the government made it impossible to proceed with its bid at present.
The procedure has caught the eye of the European Commission, which has asked Rome for clarifications on how it used the tool.
The deal would also give Assicurazioni Generali control over a large block of its own stock, making it more difficult for minority shareholders to dislodge its current management. Generali’s CEO Philippe Donnet defeated a motion to depose him at the company’s shareholder meeting last week, brought by the holding companies of two of Italy’s richest families.
Donnet, a Frenchman, is currently forcing through a merger with the asset management arm of French group Natixis, a move that Rome fears will dilute its informal influence over one of the biggest holders of Italian government debt. Governments everywhere are anxious to keep as much control over the markets in which they borrow, conscious that decades of deficits have raised doubts over their ability to ever pay back their debts.
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