In another move to further consolidate the Italian banking sector, Banca Monte dei Paschi di Siena (MPS) has launched a €13.3 billion all-share voluntary takeover bid for Mediobanca. The merger, announced on January 24, 2025, aims to create a national champion positioned as the third-largest bank in Italy across key segments. The offer, set at 2.3 newly issued MPS shares for each Mediobanca share, values Mediobanca at €15.99 per share, reflecting a 5% premium over its January 23 closing price.
Complementary Strengths, Minimal Overlaps
Unlike previous high-profile mergers in Italy, such as Intesa Sanpaolo’s acquisition of UBI Banca in 2020, which faced significant scrutiny due to overlaps in products and geographic coverage, the MPS-Mediobanca deal is largely complementary. MPS’s strength in retail banking, particularly in central and southern Italy, aligns with Mediobanca’s expertise in wealth management and investment banking, primarily focused on northern Italy. This distinction suggests the two institutions can combine their resources and expertise without substantial redundancy.
The complementary nature of the deal is expected to result in fewer regulatory hurdles, as there is minimal overlap in the parties’ customer bases or product offerings. This could mean the merger will avoid significant remedies or divestitures, unlike past transactions where competition concerns led to branch closures or asset sales.
Regulatory Landscape
Given the domestic focus of both institutions—most of their revenues and operations are concentrated in Italy—the deal will likely be reviewed by the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato, AGCM) rather than the European Commission. According to MPS, the antitrust review may be completed by June/July 2025 .
Consolidation Reshaping the Italian Banking Landscape
The proposed MPS-Mediobanca merger follows a wave of consolidation in the Italian banking sector. The 2020 acquisition of UBI Banca by Intesa Sanpaolo significantly altered the market, creating a banking giant with more than a quarter of the national retail market. Similarly, ongoing discussions between UniCredit and Banco BPM have the potential to create another powerhouse in the sector. If both the MPS-Mediobanca and UniCredit-Banco BPM deals are approved, the Italian banking landscape could see the emergence of three dominant players—Intesa, UniCredit, and the new MPS-Mediobanca group—accounting for a substantial portion of the market. This consolidation would leave smaller regional and cooperative banks navigating an increasingly competitive environment.
Strategic and Financial Rationale
According to the parties, the merger promises substantial synergies, estimated at €700 million annually, and enhanced utilization of MPS’s Deferred Tax Assets (DTA), valued at €1.2 billion for Mediobanca shareholders. The combined entity aims for a diversified business mix, with a projected Return on Tangible Equity (RoTE) of 14% and a strong CET1 capital ratio of 16%. MPS CEO Luigi Lovaglio highlighted the opportunity to “build a future of growth and innovation,” emphasizing the merger’s potential to strengthen the combined bank’s capacity to support families, SMEs, and the broader Italian economy.
Looking Ahead
The merger reflects the ongoing consolidation trend in Italy’s banking sector, and it fuels the discussion that Europe needs bigger European banks to compete with the US counterparts. In addition to the proposed mergers in Italy, another mega merger between BBVA and Banco Sabadell is currently under reviewed by the Spanish Competition authority (CNMC).
