January 29, 2020 / 6:06 PM / in 2 months

Mediobanca CEO expects second-tier banks to look at M&A in 2020

FILE PHOTO: Mediobanca CEO Alberto Nagel poses for a photograph in the occasion of a news conference to present Mediobanca's new business plan in Milan, Italy, November 12, 2019. REUTERS/Flavio Lo Scalzo

MILAN (Reuters) - Second-tier banks in Italy, Spain and possibly Germany are likely to consider mergers this year in a bid to boost returns which are insufficient to cover their cost of equity, the chief executive of investment bank Mediobanca said.

Speaking at a BreakingViews event in Milan on Wednesday, CEO Alberto Nagel said ongoing pressure from low rates and a possible rebound in loan loss provisions from new, so-called ‘calendar provisioning’ rules were all factors pushing lenders to consider mergers now that a major bad loan clean-up had been completed.

“I think consolidation will be more on the agenda of CEOs this year,” he said.

Reporting by Gianluca Semeraro and Andrea Mandala, editing by Valentina Za

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