MPS shares have more than tripled from 2 euros in late 2022. The government is supportive but is concerned about the Generali-Natixis situation. MPS CEO is focused on the industrial rationale behind the deal, with Mediobanca being an option since 2022, although the conditions were not favorable.
MILAN, Jan 24 – Monte dei Paschi (MPS) CEO Luigi Lovaglio has been working tirelessly since his appointment in early 2022, tasked by Italy’s Treasury to revitalize the world’s oldest bank, which had been bailed out five years prior. In October 2022, he worked overnight to facilitate a share sale, as MPS’s seventh cash call in 14 years led to last-minute anxiety among the underwriting banks. At that time, MPS struggled to sell shares at 2 euros each. This week, MPS stock traded at 7 euros, following Lovaglio and finance chief Andrea Maffezzoni’s late-night efforts to launch a 13.3 billion euro ($14 billion) all-share takeover bid for Mediobanca, Italy’s historic investment bank.
Between 2017 and 2022, MPS managed to clean up its balance sheet with over 10 billion euros in cash, positioning itself to benefit from rising rates and participate in the ongoing consolidation within the Italian banking sector. Once seen as a potential source of contagion for the industry, MPS is now pursuing a bank that has long been influential in Italy’s financial landscape. Lovaglio, 69, acknowledged the significance of his bold move and aimed to convey a conciliatory message to analysts, stating, “We don’t want to take any action that can in some way weaken the powerful organization that Mediobanca is.”
Analysts expressed concerns about the unlikely pairing of Mediobanca and MPS, noting that they share little beyond two major shareholders: Delfin, the holding company of the late billionaire Leonardo Del Vecchio, and tycoon Francesco Gaetano Caltagirone. Over the past two years, international funds have increasingly invested in MPS as the Treasury reduced its stake from 68% to 11.7%. The unexpected bid led to a sell-off, with MPS shares closing down 7%. An insider indicated that advisers from UBS and JPMorgan would work to clarify the deal to investors and alleviate worries that it might reflect a hidden agenda from the shareholders.
Delfin and Caltagirone also hold stakes in Italian insurer Generali and have long criticized Mediobanca CEO Alberto Nagel for relying too heavily on income from Mediobanca’s stake in Generali. This week, they opposed Generali’s asset management partnership with France’s Natixis Investment Managers, finding support from the government, which is wary of savings moving outside Italy. Concurrently, the government’s commitment to establishing a third major banking group in Italy to compete with Intesa Sanpaolo and UniCredit has strengthened. Rome believed it was making progress when it sold shares in MPS to Banco in November.
