Merger Talks Intensify Between Large Cooperative Banks in Italy

italian bank

The Banca Popolare di Milano is a small lender located in Italy, but it could be making some big changes in the near future. The bank is in talks to potentially merge with the Banco Popolare SC or UB Banca SpA. While no definitive answers have been given as to whether or not the merger will take place or as to all that the merger could mean for the companies involved, most are speculating that a merger will take place in the very near future and that it will mean major changes for everyone involved.

The most likely merger, at this point, appears to be between the Banca Popolare di Milano and SpA, which is Italy’s fifth largest lender when assets are factored in. The other potential partner in the deal, The Banco Popolare SC, is just ahead of it as the fourth largest lender by assets.

Recently, shares were rising among all three lenders, however, as everyone anxiously awaited the news of whether a merger would occur and tried to stake some kind of claim in the deal. They weren’t just waiting to see if a merger would happen, however; they were also waiting to see, if it did, which of the companies it would be between . Unfortunately, answers have been slow in coming, and everyone with a stake in the potential dealings is waiting with bated breath.

If a merger does occur, and it’s likely that it will, the partnership could be a huge and business-changing deal for the companies involved and all who are invested in them. It would also mark the realization of a recently passed Italian law that changed the governance rules as they relate to banks.

Under the new law, shareholders of some banks are allowed to agree upon and make big decisions, regardless of how small or distant their stakes in the banks may be. This law only applies to moderate banks, with $8.7 or less in assets, and the aforementioned Banca Popolare di Milano fits the bill. As such, those involved in this deal have until July of 016 to adjust principle amounts, vote, and make a final decision.

As one might expect, the new law is affecting other banks as well. Now, all moderate banks, not just the ones involved in this deal, are more subject to takeovers, though many banks, including the three involved, have planned defensive mergers to protect themselves. Thus, a merger between these three banks or between just two of them could serve quite well as a protective mechanism.

In fact, no matter what ultimately happens, one can assume that it will definitely be what the banks involved consider to be in their best interest when it comes to protecting themselves. There is a lot of speculation about what will happen and what should happen, as well as a lot of disagreement about what the best course of action is for all involved. No matter what does happen, however, it’s practically guaranteed that this merger will set an example for other banks in the same position to follow, meaning that this deal won’t just affect these three banks, but all banks who have become more vulnerable as a result of the new law.


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