Italy’s Cooperative Banks Weigh Consolidation Amid Rule Change

Executives of Italy’s largest cooperative banks say they’re considering plans to merge with competitors, the clearest sign yet that new rules that force them to become joint-stock companies will lead to an industry reorganization.

Banco Popolare SC Chief Executive Officer Pier Francesco Saviotti told reporters in Milan Tuesday that the bank may play a role in consolidation and that a combination with banks including Banca Popolare di Milano Scarl would be suitable. His counterparts at Unione di Banche Italiane ScpA and Pop. Milano echoed that mergers are feasible, without identifying potential targets.

Under sweeping rules announced by the government last month, the country’s 10 largest cooperative banks will be transformed within 18 months. “Popolari” lenders with assets of more than 8 billion euros ($9.1 billion) will have to abolish rules restricting the size of a single investor’s holding and limiting shareholders to one vote each, regardless of the size of their holding, two main obstacles for consolidation.

“When the decree will become law, it will create a lot of opportunities,” Giuseppe Castagna, Chief Executive Officer of Pop. Milano, told reporters in Milan Wednesday, speaking at the same event. “We can be an aggregating center to create the third, fourth-largest bank in the country,” he said.

The bankers said they haven’t held talks on deals and Saviotti said that speculation the bank would combine with UBI and Banca Monte dei Paschi di Siena SpA is “groundless.” Castagna said a press report that the bank may merge with Banca Popolare dell’Emilia Romagna SC is unfounded.

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