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Banco BPM says on merger alert after Intesa UBI tie-up

By Andrea Mandala

MILAN, Aug 6 – Banco BPM, Italy’s third-largest bank, is on alert for expected further consolidation in the banking sector following Intesa Sanpaolo’s takeover of smaller rival UBI, the bank’s chief executive said on Thursday.

Banco BPM has been tipped as a potential merger candidate after the biggest bank merger Italy has seen in years saw Intesa strengthen its position in BPM’s own home market in the wealthy north of the country.

“There is, of course, a new situation” after the Intesa deal, Banco BPM Chief Executive Giuseppe Castgana told analysts after second-quarter results that saw a 46 million euro net loss on the back of lower revenues and more loan writedowns prompted by the coronavirus pandemic.

“For sure this is a catalyst for new banking aggregation, and our job is to be ready to take any potential opportunity”, Castagna said.

Banco BPM, created in 2017 by the merger of two smaller cooperative lenders, is based in the Lombardy and Veneto regions which suffered heavily in the COVID-19 pandemic.

Operating in Northern Italy where the combined Intesa-UBI will be increasingly dominant, sources with knowledge of the matter have told Reuters that Banco BPM has come under pressure from the government to buy Monte dei Paschi di Siena, the problem child of Italian banking which is 68% owned by the state.

It has repeatedly denied any interest. Bankers say it could instead become a target for France’s Credit Agricole or BNP Paribas, which both operate in Italy and could cut costs through a merger.

Banco BPM posted a second-quarter net loss of 46.4 million euros, plunging from a profit of 447.6 million euros in the same period a year ago. The bank booked 263 million euros in loan writedowns, up 23% on a quarterly basis.

Given the current macroeconomic situation, Banco BPM said targets in the business plan issued before the coronavirus crisis were no longer valid and a new plan would be issued when conditions were clearer. (Reporting by Andrea Mandalà; Editing by James Mackenzie, Paul Simao and Jonathan Oatis)

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