Banking institution Mediobanca secures European Central Bank's green light for acquisition of Banca Generali.
In a significant move for the European banking sector, Italian merchant bank Mediobanca has received conditional European Central Bank (ECB) approval to acquire Banca Generali for €6.3bn. This acquisition is part of Mediobanca's strategy to prevent a takeover by Monte dei Paschi di Siena (MPS).
Mediobanca dismissed MPS's buyout bid as "destructive" and lacking "industrial and financial rationale" for its shareholders. The ECB's authorization marks a new chapter in Mediobanca's growth, with Banca Generali set to be classified as a "significant supervised entity" once the acquisition is complete, placing it under the ECB's direct supervision.
Following the acquisition, Mediobanca will be required to present the ECB with a detailed integration plan within a six-month period. This plan must include specific measures and solutions for integration, a timeline focusing on integration activities, and an IT integration strategy. The primary aim is to achieve €300 million in annual cost synergies while preserving a robust 18.6% CET1 capital ratio.
The integration targets the creation of a €215 billion wealth management entity by 2027. The merged group is projected to reach an 8% return on tangible equity (ROTE) by 2027. The ECB's oversight reflects its broader strategy to enhance systemic stability by encouraging private-sector consolidation and cross-industry integration in the European banking sector.
Generali, which holds a 50.2% stake in Banca Generali, has signalled a willingness to engage in further discussions regarding Mediobanca's proposal. The Italian company has committed to evaluating the offer in accordance with its internal review processes in the upcoming weeks. A shareholder vote on the proposed acquisition of Banca Generali by Mediobanca is scheduled for 21 August, as mandated by Italian takeover regulations.
To finance the acquisition of Banca Generali, Mediobanca intends to divest its holdings in the insurance arm of Generali. The ECB has also approved Mediobanca's purchase of direct and indirect stakes that collectively exceed 10% of the consolidated own funds of the Mediobanca Banking Group.
The decision to acquire Banca Generali is a strategic move for Mediobanca, aiming to create a stronger presence in the banking sector and safeguard its future from potential takeovers. The ECB's approval and ongoing scrutiny reflect the importance of ensuring operational, financial, and governance coherence in the merger, minimizing risks such as client attrition, integration delays, and cultural misalignment between the merchant banking model of Mediobanca and the insurance-driven model of Banca Generali.
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