Banking risk and its repercussions for households and businesses
Customers are becoming increasingly dependent on a small number of intermediaries who are playing an ever more central and dominant role
Whatever happens, it will be a failure. For families and businesses, whatever the outcome of the battle between Banca Intesa and MPS, it will not be good news. The final stage of the ongoing bank consolidation process now seems to be drawing to a close, and attention is already turning to the next move that some other institution will make on the chessboard of the Italian financial system.
But fewer banks means less credit and fewer choices for customers, who will foot the bill for an increasingly concentrated market, with an ever-greater imbalance of power. Over the last 10 years – to stick to a relatively recent timeframe – the number of banks operating in Italia has fallen from 640 at the start of 2016 to 414 at the start of 2026 (-35 per cent), whilst the number of branches across the peninsula has fallen from 30,258 to 19,140 (-37 per cent).
Over the same period, lending to businesses fell by a staggering 38 per cent. We have gone from over 1,000 billion in loans to non-financial companies, in real terms, to 617.6 billion euros at the end of last August. This is a clear sign of the credit sector’s withdrawal from the real economy. This figure would be even more striking had it not been for the public intervention of the SME Guarantee Fund, which enabled many businesses to access credit; otherwise, they would have faced an even more severe credit crunch.
The banking sector’s business model has now undergone a structural transformation, shifting revenue from traditional net interest income to fees for services and asset management, in particular towards the distribution of financial and insurance products, which, through the commissions borne by households, now account for around half of the sector’s total revenue.
And it is no coincidence that the banking takeover is leading to a reduction in competition within the banking sector, not least through greater interconnections with neighbouring sectors. Through the public takeover bid for MPS, Intesa Sanpaolo will also indirectly acquire the assets and shareholdings of the Siena-based bank, including its stake in Mediobanca and, by extension, the much-coveted stake in Assicurazioni Generali.
