The ECB gives the green light to Monte Paschi's takeover bid for Mediobanca

The European Central Bank has approved the takeover bid launched by Monte dei Paschi di Siena (MPS) for its rival Mediobanca, according to a source close to the matter cited on Tuesday. This approval marks a decisive step in one of the most daring operations in the Italian banking sector in years, against a backdrop of accelerated consolidation of the national financial landscape.

Launched in January, the takeover bid for Banca Monte dei Paschi di Siena (MPS) took the markets by surprise. The Siena-based bank, which symbolized Rome's banking difficulties until its bailout by the state in 2017, is now taking on one of the historic pillars of Italian capitalism. The offer, made entirely in shares, values Mediobanca at €14.6bn, compared with a current market capitalization of close to €16bn. MPS, meanwhile, is worth €8.7bn.

The ECB's decision, taken by its supervisory board via a written procedure, still needs to be approved by the Governing Council before being officially notified to MPS. The Tuscan bank plans to formally launch its offer in July. Mediobanca shareholders will then have several weeks to sell their shares.

In a turbulent climate for the sector, this offer is one of a series of often hostile attempts at consolidation that are redrawing the country's banking map. The Italian government, which still held 68% of MPS in 2017, has gradually reduced its stake to 11.7%, with the stated aim of creating a major competitor to the giants Intesa Sanpaolo and UniCredit.

Last November's sale of a 15% stake to a group of Italian investors, including the Del Vecchio and Caltagirone families, who are also influential shareholders in Mediobanca, is now under investigation by the Milan public prosecutor's office, while the European Commission is also examining the terms of the deal. Brussels has not commented on the information reported by the Financial Times on Tuesday.

MPS, bolstered by strong results thanks to rising interest rates and favorable court rulings that freed up provisions, has a solid cash position that exceeds its regulatory requirements. It could therefore partially convert its offer into cash to make it more attractive.

In response to this offensive, Mediobanca attempted to defend itself by proposing the acquisition of private bank Banca Generali, with the aim of refocusing on wealth management. However, the project suffered a setback when the shareholder vote, initially scheduled for June 16, was postponed to September due to insufficient support.

The government's move to bring MPS closer to Banco BPM was thwarted by a competing bid for BPM from UniCredit at the end of November. However, UniCredit CEO Andrea Orcel recently indicated that he could abandon the deal if the conditions imposed by the state remained unchanged.