Risk factors are putting pressure on the banks; focus on the MPS board following Intesa’s bid

(Il Sole 24 Ore Radiocor) - The banking crisis continues to dominate the sector on the Milan Stock Exchange. Meanwhile, new developments are emerging in the consolidation phase, which sees Intesa Sanpaolo and Banca Monte Paschi Siena, banking shares are on the rise, buoyed by the prospects of a restructuring of the sector and following the falls seen in recent sessions. All eyes are on the Siena-based bank’s extraordinary board meeting on the afternoon of Monday 12 October, to take stock of the situation following the relaunch of Intesa’s public takeover bid announced on 3 October. The directors will assess Ca’ de Sass’s 25-cent increase in the bid, but will also have to contend with the decision by major shareholders – Delfin and Caltagirone, together with Edizione and other minority shareholders – to vote against CEO Luigi Lovaglio’s defensive strategy at the general meeting, which includes the OPs on Banco Bpm and Banca Generali. The former has also received a flat-out ‘no’ from Credit Agricole, which holds a stake of around 30 per cent in the Milan-based bank, whilst no official position has yet been taken on the second proposal by Generali.

Meanwhile, the market is speculating on what counter-moves the Lucanian banker might need to take to extricate himself from a situation that currently appears to favour the bid by the bank led by Carlo Messina. Lovaglio needs two-thirds of the votes in favour at the shareholders’ meeting on 29 October, a threshold that currently seems almost impossible to reach. The manager now – according to press reports – could withdraw the agenda items for the general meeting or play for time and postpone the meeting to draw up a new plan that could include an increase in the special dividend. Meanwhile, he has secured the support of the ISS proxy, which has recommended that Mediobanca shareholders vote in favour of the merger with Siena, whilst raising some concerns regarding the exchange ratio. However, the key recommendations from ISS and Glass Lewis relate to the MPS shareholders’ meeting, which is expected to take place in the coming hours.

Meanwhile, Unipol has obtained authorisation from the ECB and the Bank of Italia to exceed 20 per cent of Bper Banca, thereby acquiring de facto control of the bank. “The regulatory green light,” comment Intermonte’s analysts, “therefore increases Unipol’s flexibility in managing these exposures and represents an important step towards the future merger” between Bper and Mps envisaged in Intesa’s plan. A move “consistent with the group’s objective of building an integrated bank-insurance financial platform on a national scale”, adds Intermonte, which confirms its ‘Outperform’ recommendation on Unipol shares with a target price of 33 euros (up from the current 25 euros).