Brussels (Brussels Morning) The potential takeover deal between the Italian banking giant UniCredit and its rival Monte dei Paschi (MPS), has hit an unexpected obstacle as several investors expressed their opposition, Reuters reported on Wednesday.
MPS is the world’s oldest continually-operating bank and currently the fourth largest bank in Italy. The state holds a 64% majority stake in the lender, but has been working on reducing its holding in light of the bank’s troubled performance, which necessitated a 5.4-billion euro bailout in 2017. The bank reportedly now needs another 2.5 billion euro to stabilise its finances.
The Italian government reportedly sees UniCredit, a global banking conglomerate and the eleventh largest bank in Europe by total assets, as an ideal partner to salvage MPS and take the problem off the government’s hands.
However, a group of UniCredit investors have stated their opposition to the potential deal. Eyewear tycoon Leonardo Del Vecchio, who holds a 1.9% stake, is refusing the merger, and is reported as rallying other large investors who share his concerns.
According to the daily Il Sole 24 Ore, Del Vecchio held meetings with representatives of Fondazione CariVerona and Fondazione CRT. Together, they hold a combined 5.36% stake in UniCredit and are looking to form a pact to have a greater say in the choice of the new CEO.
Replacement CEO needed
The merger plan already hit a snag in December, when UniCredit CEO Jean Pierre Mustier abruptly resigned, citing disagreement with the bank’s board. Mustier was in talks with the Italian government, and was said to be open to a merger which would have virtually no impact on the bank’s capital ratios.
Mustier is to leave the bank by April at the latest, unless the board finds a suitable replacement at an earlier date. Italian media agree that his successor, whoever that might be, will shape and decide any future potential takeover of MPS.
On its side, Rome is working to make the MPS sale more attractive for any future CEO, and could be willing to take on about 14 billion euro in non-performing loans from UniCredit, using the state-backed loan manager AMCO.