Shock therapy to spur wave of mergers among Italy's 'popolari' banks

Sat Apr 11, 2015 8:36am EDT
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By Silvia Aloisi and Valentina Za

MILAN/VICENZA (Reuters) - Italy's biggest cooperative banks are bracing for a wave of mergers following a government reform that forces them to convert into joint stock companies within 18 months.

The reform aims to strengthen Italy's banking sector, which fared the worst in a Europe-wide health check of lenders last year. The government says it will also ultimately support bank lending to businesses, which has been shrinking for the past three years as Italy grappled with its longest post-war recession.

Its most immediate effect will be to spur a long-delayed consolidation by making it easier for ownership of the so-called "popolari" banks to change, bankers say.

They say the shake-up could also help find a buyer among the cooperative banks for troubled Monte dei Paschi di Siena (BMPS.MI: Quote) or Carige (CRGI.MI: Quote), the two Italian lenders that emerged as the weakest in the European checks.

"The measure has had the effect of an electric shock for the popolari," Piero Giarda, chairman of the supervisory board of Banca Popolare di Milano PMII.MI, told a shareholder meeting on Saturday.

The bank is one of the 10 largest cooperative lenders affected by the reform, which was approved by parliament last month and scraps voting rules giving shareholders one vote each regardless of the size of their stake.

The others are UBI (UBI.MI: Quote), Banco Popolare BAPO.MI, Popolare dell'Emilia Romagna (EMII.MI: Quote), Popolare di Vicenza, Veneto Banca, Popolare di Sondrio (BPSI.MI: Quote), Credito Valtellinese (PCVI.MI: Quote), Popolare di Bari, Popolare dell'Etruria e del Lazio PEL.MI.

Talks over possible tie-ups have already started, at least informally.   Continued...

Employees work at Banca Popolare di Lodi in downtown Milan October 25, 2010. BMPSREUTERS/Stringer  (ITALY - Tags: BUSINESS) - RTXTTNZ