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Italy’s Banco BPM shares rise on merger expectations

MILAN, Aug 11 – Shares in Banco BPM surged on Tuesday on expectations that Italy’s third-largest bank could become involved a possible merger in a new round of consolidation among the country’s banks following Intesa Sanpaolo’s takeover of smaller rival UBI Banca.

Banco BPM Chief Executive Giuseppe Castagna on Tuesday reiterated in a newspaper interview that the Intesa deal, creating Europe’s eighth-biggest bank, had changed the competitive scenario and that BPM was on the lookout for possible merger opportunities.

“Getting close to Intesa will be difficult given the gap that’s opened up in terms of size. But it’s true that two or three big banking groups would be necessary in the interests of the Italian economy,” he told business daily Il Sole 24 Ore.

The remarks echoed comments he made last week when the bank released its second quarter results.

BPM’s shares climbed 7% in light summer trading, making the bank the biggest gainer on the blue chip FTSE index in Milan.

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

Castagna said there were no immediate plans for a merger and he declined to comment when asked about market speculation over a merger plan with UniCredit.

People familiar with the matter have told Reuters some Banco BPM shareholders would favour a tie-up with UniCredit, which has come under pressure to do a deal since it is set to be overtaken as Italy’s biggest bank by the combined Intesa-UBI group.

Unicredit Chief Executive Jean-Pierre Mustier has ruled out mergers saying he is focused on improving investor returns and boosting UniCredit’s share price. (Reporting by Andrea Mandalà; editing by Jane Merriman)

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