Lovaglio: ‘The deal with Mediobanca is already underway’

“The transaction with Mediobanca is already underway and its integration framework has already been incorporated into our business plan. To regard it as a new transaction substantially overestimates both the work that remains to be done and the overall risk of execution.” This is written by Luigi Lovaglio, CEO of Monte dei Paschi di Siena, in a letter addressed to the Financial Times in response to the ‘Lex’ column published by the British newspaper on 22 August. An article which, according to the CEO of MPS, ‘erroneously describes’ the plan ‘as a “four-way” integration. This is not the case’.

Lovaglio continues: “Neither the Banco BPM nor the Banca Generali transactions are equivalent, and therefore should not be regarded as a single integration challenge. Banco Bpm represents a conventional merger between two commercial banks with complementary franchises and a clear business rationale. Banca Generali is a strategic acquisition in the wealth management sector, with a distinct operating model and client base.”

The MPS project, as stated in the CEO’s letter, “goes well beyond the defensive measures that Lex, rather surprisingly, describes as ‘bizarre’: it reflects a strong vision for growth aimed at better serving households and businesses, as well as the Italian economy as a whole.”

According to Lovaglio, it is striking that the FT’s column ‘does not apply any of these assessment criteria to the transaction proposed by Intesa Sanpaolo’. Intesa’s bid inherently entails integration, regulatory, antitrust and divestiture risks, including the break-up of MPS itself and a reduction in the level of competition within the Italian financial system, yet these aspects are not examined.”

All things considered, in the manager’s view, both plans ‘present a certain degree of complexity, and a fair comparison should take this into account. “The vision we have put forward is clear: a banking market characterised by genuine competition, built by continuing to reward our shareholders and support the communities we serve,” the letter concludes.