Italian Banks Close In on Merger
February 12 2016 - 06:00AM
Dow Jones News
MILAN--Banco Popolare SC Chief executive Pier Francesco Saviotti
said Friday he hopes to close a merger agreement with Banca
Popolare di Milano in a little more than a week's time, clinching a
deal that would create Italy's third largest banking group by
assets.
Popolare di Milano had been in parallel merger talks with Banco
Popolare and UBI Banca in the past months, after the Italian
government introduced changes to the governance rules of large
cooperative banks last year, known as "popolari," to induce mergers
in the sector.
The Italian government's reform is aimed at pushing small mutual
banks, to consolidate under holding companies with at least €1
billion in equity to try strengthen the country's fragmented local
banking sector.
It comes amid growing investor worries about the scale of bad
loans on the books of Italian lenders, concerns which have sent
banks stocks sharply lower this year.
Around 400 tiny mutual banks, many with few branches and serving
small communities, will be affected by Rome's latest reform. Prime
Minister Matteo Renzi has said he hopes this will create a single
group in the next 18 months, the deadline for mutual banks to
implement the reform.
"Our banking system is solid," Mr. Renzi said on Wednesday. "But
it needs larger banks. Now mutual banks need to stay within a
stronger system."
Latest figures from the Bank of Italy showed bad loans at
Italian banks are persistently high, including those net of banks'
provisions.
A deal struck last month between the Italian government and the
European Commission, allowing government guarantees for bundles of
bad loans, has failed to reassure financial markets.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
February 12, 2016 05:45 ET (10:45 GMT)
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