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Italian Bank Merger Wins Backing as Hurdles Remain to More Deals

  • Banco Popolare, Banca Pop. di Milano shareholders back merger
  • Paschi woes, referendum seen deterring more deals for now
People walk past a branch of Banca Popolare di Milano bank in Milan.

People walk past a branch of Banca Popolare di Milano bank in Milan.

Photographer: Guiseppe Cacace/AFP via Getty Images
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The approval of Italy’s biggest banking merger in almost a decade marks a first step in a process of consolidation urged by regulators, investors and Prime Minister Matteo Renzi. But plenty of obstacles remain to further deals among the country’s beleaguered lenders.

Politics, tougher capital standards and a mountain of bad debt on Italian banks’ balance sheets mean the combination of cooperative lenders Banco Popolare SC and Banca Popolare di Milano Scarl, approved by shareholders on Saturday, may be a one-off for now.