Banca Generali gains as MPS CEO explores alternatives to Intesa bid

Shares in Banca Generali increased by 1% on Wednesday, following a report from Italian daily Il Sole 24 Ore. Monte dei Paschi (MPS) CEO Luigi Lovaglio is reportedly considering two potential share-swap offers for Banco BPM and Banca Generali, presenting them as alternatives to Intesa Sanpaolo's takeover bid for MPS. The newspaper claims MPS's board has not yet been informed about the plan, although directors familiar with Lovaglio's strategy have been made aware of the possibility of an imminent meeting.

This comes after Prime Minister Giorgia Meloni's comments last week, in which she expressed her hope that MPS would not be broken up as a result of Intesa's bid. Prior to Intesa's unsolicited takeover bid, which was initially valued at around €30.6 billion, rival Banco BPM had proposed a merger of equals with MPS, leading to a bidding war for control of the world's oldest bank.

However, Banco BPM discontinued its pursuit of MPS following Crédit Agricole's announcement that a tie-up between the two mid-sized lenders would not generate value for BPM shareholders. After acquiring rival Mediobanca in a deal completed in December, Banca Generali became the largest shareholder in MPS, holding approximately 13% of the insurer, one of the key assets at stake in the battle for MPS.

Italian Prime Minister Meloni has consistently advocated for using MPS's reprivatization to increase competition in the Italian banking sector by creating a third major player, alongside market leaders Intesa and UniCredit, viewing MPS as a valuable asset due to its deep local roots and status as the world's oldest bank. Under Intesa's plan, MPS would see the sale of half of its branches, its Siena headquarters, and its brand to insurer Unipol, which would then merge these assets with its own lender BPER.