Italy brings on board Banco BPM in $1.2 billion Monte dei Paschi stake sale

By Giuseppe Fonte, Valentina Za and Andrea Mandala

ROME (Reuters) -Italy on Wednesday raised 1.1 billion euros ($1.16 billion) by selling 15% of bailed-out bank Monte dei Paschi di Siena, bringing on board rival Banco BPM as a shareholder in the Tuscan lender.

Banco BPM, Italy’s third-largest bank and the Italian Treasury’s preferred option as a merger partner for MPS, said it had no plans to seek supervisory approval to cross the 9.9% ownership threshold in MPS, reiterating its standalone strategy.

However, the investment could pave the way for an eventual combination as midsized lenders are under pressure to bulk up to face rising technology costs.

Banco BPM said the investment was consistent with the buyout offer it launched last week to acquire full control of Anima Holding, a fund manager which also sells its products through MPS branches.

Anima separately said it had taken a 3% stake in the MPS stake placement.

After two years of record profits and shareholder rewards, with interest rates declining, Italian banks are looking for new revenue sources such as the fees earned on the sale of funds. Another option is the cost cuts they could achieve in a merger.

Businessman Francesco Gaetano Caltagirone, a shareholder in both Banco BPM and Anima, also invested in MPS with a 3.5% stake, a source familiar with the matter said.

The Treasury placed the MPS shares at 5.792 euros each through an accelerated bookbuilding procedure, securing a 5% premium to Wednesday’s closing price, it said in a statement.

When settled, the transaction would reduce Italy’s stake in MPS, the world’s oldest bank, to 11.7% from 26.7%.

CEDING CONTROL

“We completed a transaction which strengthens the shareholder base of an important player in the banking world, in a serious and reserved manner like we’ve always said we would,” Economy Minister Giancarlo Giorgetti said in a statement.

Banca Akros, a Banco BPM unit, handled the stake sale on behalf of the Treasury.

Banco BPM, whose main investor is France’s Credit Agricole (OTC:CRARY), said the MPS stake would boost earnings per share by 2.5% yielding a 14% return.

The sale allowed the ministry to bring the stake below a 20% threshold that could indicate a de facto control over MPS.

Italy was committed to showing European Union competition authorities by the end of the year it no longer controlled MPS, in line with reprivatisation commitments agreed during a 2017 bailout.

The original EU deadline to return MPS to private hands was extended after Italy failed to sell the bank to UniCredit in 2021.

At the time MPS was loss-making and weighed down by legal risks which court rulings have later dispelled for the most part.

As part of the deal, the Treasury said it had committed not to sell more any MPS shares on the market for 90 days without consent of the global coordinator.

Italy had already pocketed nearly 1.6 billion euros by lowering its original 64% MPS shareholding through two previous ABB (ST:ABB) placements over the past year.

Two years ago, MPS completed a make-or-break new share issue at a price of 2 euros each, to raise money to fund thousands of voluntary staff exits and boost profits through cost cuts.

Giorgetti and Prime Minister Giorgia Meloni have both said the privatisation of MPS should help build a third large banking group, alongside Intesa Sanpaolo (OTC:ISNPY) and UniCredit.

($1 = 0.9466 euro)