Monte dei Paschi and Banco BPM weigh merger path

Talks between Monte dei Paschi di Siena and rival Banco BPM resurfaced shortly after the reappointment of MPS CEO Luigi Lovaglio in April, according to reports from Italian news agency Adnkronos. The potential union of Italy’s third and fourth-largest lenders remains a long-discussed strategy to challenge the dominance of UniCredit and Intesa Sanpaolo.

The prospect of a tie-up has gained momentum since Banco BPM acquired a stake in MPS last November, a move that inadvertently triggered a failed takeover bid for BPM by UniCredit. While both Giuseppe Castagna of BPM and Lovaglio secured new mandates in April, the path to consolidation remains complex. Castagna has publicly acknowledged MPS as a viable partner, though he noted that the timing of such a deal requires careful navigation.

Operational hurdles complicate the timeline, as MPS is currently committed to integrating Mediobanca, a project scheduled for completion by the end of 2026. Despite these internal priorities, reports suggest merger discussions have accelerated, with speculation mounting that BPM may engage Goldman Sachs as an adviser alongside Lazard and Citi. Internal opposition also persists; billionaire investor Francesco Gaetano Caltagirone recently cautioned that any deal must avoid terms that would leave MPS effectively absorbed by its partner.

Strategic alignment between the two banks deepened during the April 15 shareholder vote, where BPM’s support proved critical in securing Lovaglio’s reappointment over Caltagirone’s objections. With Credit Agricole serving as the primary shareholder in BPM—which now holds a 3.7% stake in MPS—the structural incentives for a merger remain significant, even as both institutions balance immediate integration goals with long-term market ambitions.