Banco BPM halts Monte dei Paschi merger talks after Crédit Agricole objects

Banco BPM has abandoned its plan to merge with fellow Italian lender Monte dei Paschi di Siena (MPS), the bank announced on 31 July. The board of Italy’s third-largest bank voted unanimously to halt talks, citing the failure to agree on terms nearly two months after it first approached MPS with a letter of intent on 7 June. The decision came just hours after Crédit Agricole, Banco BPM’s largest shareholder with a 29.3% stake, publicly criticised the deal during its half-year results presentation.

Crédit Agricole draws a red line

The French banking group made its opposition clear in blunt terms. Speaking during the earnings call, Crédit Agricole CEO Olivier Gavalda said the group had seen no concrete proposal.

We haven’t received any project, nor any information about a potential merger between MPS and BPM. Consequently, we are not in a position to say whether it could create value for shareholders.

Gavalda underscored his group’s blocking power, reminding the market that with almost 30% of voting rights, nothing could proceed without the French bank’s consent.

With our 29.3% stake, we are by far the largest shareholder of Banco BPM. Nothing can be done against us or without us.

Deputy general manager Clotilde L’Angevin told analysts that Crédit Agricole’s preferred scenario would instead be a merger between Banco BPM and Crédit Agricole Italia, its Italian subsidiary. She added that the group had not yet asked the European Central Bank for authorisation to take control of Banco BPM, but stressed that Italy remains a strategic market where Crédit Agricole wants to keep growing.

The board decision

Banco BPM’s board met on Friday afternoon, having been convened late on Thursday after weeks of speculation about a possible acceleration of the merger project. In its statement, the board reiterated its belief in the “strong strategic and industrial rationale” of the proposed tie-up, which it said could have created a major new Italian banking and financial group. Nonetheless, the directors concluded that almost two months after the initial letter, “the conditions for reaching a shared agreement between the parties have not materialised.” The bank will now focus fully on its standalone strategic plan and on delivering long-term value to its shareholders.

MPS reacts and looks ahead

Monte dei Paschi, in a note issued later on the same day, said it “took note” of both Crédit Agricole’s remarks and Banco BPM’s decision. The Siena-based bank stressed that it would stay focused on implementing its own growth plan and on the integration with Mediobanca, adding that it would continue to evaluate every strategic option in the interest of all stakeholders. Sources close to the bank gave no indication of an immediate alternative to the now-defunct Banco BPM proposal.

Implications for Intesa Sanpaolo

The collapse of the Banco BPM-MPS talks removes a hurdle for Intesa Sanpaolo, which on 8 June launched a roughly €30.6 billion public exchange offer for Monte dei Paschi. With the rival merger off the table, Intesa’s bid faces one fewer obstacle. Intesa CEO Carlo Messina had previously mocked Banco BPM’s initial letter as a “love letter.” The path is now open for Intesa to press ahead, although regulatory and governance hurdles remain, including scrutiny by Consob, which has been monitoring governance issues in Siena.

Crédit Agricole’s intervention and Banco BPM’s retreat reshape the Italian banking landscape. Attention now shifts to Intesa Sanpaolo’s next move and to whether Crédit Agricole will ultimately seek a larger say over Banco BPM’s future.