Banco Popo­lare, BPM to meet ECB of­fi­cials for merger

The Pak Banker - - MARKETS/SPORTS -

Ital­ian banks Banco Popo­lare SC and Banca Popo­lare di Mi­lano Scarl have reached agree­ment on a merger plan, and their chief ex­ec­u­tive of­fi­cers will meet with Euro­pean Cen­tral Bank of­fi­cials Wed­nes­day to seek ap­proval, two peo­ple with knowl­edge of the mat­ter said.

The com­bi­na­tion would cre­ate the coun­try's third-largest len­der and may prompt more deals among the Italy's many co­op­er­a­tive banks. The govern­ment is press­ing for con­sol­i­da­tion of the so-called popo­lari to spur lend­ing and help the coun­try re­cover from a three-year re­ces­sion.

Pier Francesco Saviotti of Banco Popo­lare and Giuseppe Castagna of Popo­lare Mi­lano have reached agree­ment on the struc­ture of the deal and will meet of­fi­cials of the ECB's bank over­sight arm to seek ap­proval to pur­sue it, said the peo­ple, who de­clined to be iden­ti­fied be­cause the talks aren't pub­lic.

Castagna will over­see the com­bined com­pany, while Saviotti will be­come the chair­man of the ex­ec­u­tive com­mit­tee, peo­ple have said. Banco Popo­lare Chair­man Carlo Fratta Pasini will con­tinue in that role, the peo­ple said. The merger would be the first deal since the ap­proval a year ago of a law forc­ing Italy's big­gest co­op­er­a­tives to be­come joint-stock com­pa­nies. Re­stric­tions on own­er­ship and vot­ing rights for th­ese com­mu­nity-ori­ented banks have long stood in the way of con­sol­i­da­tion.

Saviotti has re­peat­edly said his bank was in ad­vanced talks to com­bine with Banco Popo­lare. Castagna said Jan. 30 that they might reach an agree­ment in Fe­bru­ary, while leav­ing open the op­tion of talks with com­peti­tor Unione di Banche Ital­iane SpA.

The merger would cre­ate a len­der with about 245 bil­lion euros ($276 bil­lion) in as­sets. Only Uni­Credit SpA and In­tesa San­paolo SpA are larger. The news was ear­lier re­ported by Il Sole 24 Ore.

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