Italian banks and insurers sprang into life this week as a potential bidding battle for Banca Monte dei Paschi di Siena SpA triggered broad gains across the country’s financial stocks.
Paschi shares have gained 19% this week, headed for their best in six years, while Mediobanca SpA, BPER Banca SpA and Unipol Assicurazioni SpA were showing double-digit gains. Banco BPM Spa and Assicurazioni Generali SpA have also seen sizeable increases.
The moves were sparked by Intesa Sanpaolo SpA’s €30.6 billion ($35 billion) offer for Monte Paschi, pitting it against Banco BPM, which had already made a pitch for what is considered to be the world’s oldest bank. Intesa’s plan involves keeping Mediobanca, which Monte Paschi took control of last year, as well as the bank’s stake in Generali.
“Like it happened in the early 2000s, the shape of the Italian banking system is changing,” said Barclays analyst Paola Sabbione, noting that the potential deals announced were generally positive for earnings-per-share and capital ratios. “The market is taking the view that this wave of consolidation will involve almost all banks in a value-accretive way.”
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Any potential deal for Monte Paschi would reignite a flurry of M&A across Italian finance that began in late 2024 when Banco BPM offered to acquire asset manager Anima Holding SpA, and Monte Paschi later took control of Mediobanca. A takeover bid by UniCredit for Banco BPM was unsuccessful, though UniCredit continues to monitor deal opportunities in its home market.
“The newsflow on Italian banking consolidation has grown significantly,” Oddo BHF analysts wrote in a note after the offers for Monte Paschi were announced this week. “This should logically have an impact on UniCredit, particularly in terms of renewed strategic pressure.”
According to KBW analyst Hugo Cruz, both Intesa Sanpaolo and Banco BPM have scope to raise their offers for Monte Paschi to about €11 ($13) a share, versus the current share price of a little over €10.
“Long Monte Paschi/short Banco BPM continues to be our preferred way to play the potential M&A scenarios,” Cruz wrote in a note this week.
Bank of America Corp. analyst Antonio Reale views Monte Paschi as undervalued and has the stock as a top pick in Italy, he wrote in a June 8 note. His price target of €11.7 implies nearly 14% upside from Thursday’s close.