Monte dei Paschi beats Q2 forecasts as €36B Intesa bid faces pushback

Monte dei Paschi di Siena beat Q2 profit expectations Friday, posting €610 million in net earnings versus a €543 million consensus, as the lender studies alternatives to Intesa Sanpaolo's €36 billion ($42 billion) cash-and-shares takeover bid.

"We would continue to assess all strategic options in the best interest of its shareholders, employees, and clients," MPS said, after Banco BPM abandoned merger talks last week that had been seen as the bank's most viable defense.

The Siena-based lender's revenue reached €2.07 billion, slightly ahead of forecasts, helped by lending growth and corporate and investment banking fees strengthened by its 2025 acquisition of Mediobanca. MPS said its core capital ratio stands at 16.3 percent, nearly seven percentage points above regulatory requirements, giving it "strategic flexibility" as it weighs options with advisers. The integration of Mediobanca is expected to be completed in the fourth quarter.

The outcome determines whether Italian banking consolidates around two dominant players or preserves a third major lender — a question with direct consequences for competition, branch networks, and the government's stake in the sector it rescued in 2017 and reprivatised in 2023/24.

The defensive picture shifted sharply when Banco BPM, which had rushed to invite MPS to merger talks in June, pulled out after its largest shareholder Credit Agricole — holding a 29.3 percent stake — said a tie-up between the two mid-sized banks would not bring "any significant value." Credit Agricole CEO Olivier Gavalda said he was not aware of "any concrete proposal" involving MPS and Banco BPM, and even suggested combining Agricole's own Italian unit with BPM instead.

Intesa's offer, unveiled in June, values MPS at 1.6 Intesa shares plus €1 in cash per share tendered, a 12.5 percent premium to the undisturbed price. MPS has called the premium inadequate, noting that comparable voluntary tender offers in Italian banking have averaged roughly 30 percent. The bank also questioned Intesa's projected €2.9 billion in annual pre-tax cost savings and revenue gains, calling them "high relative to the economic scale" of the assets involved.

Intesa CEO Carlo Messina has refused to sweeten the terms. "There is zero possibility that we will increase our price for Monte dei Paschi," he said, pointing out that MPS trades at about 15 times earnings versus roughly 11 times for Intesa and UniCredit.

Branch Divestment and the BPER Angle

To address antitrust concerns, Intesa has agreed to sell about 635 MPS branches — roughly half the network — plus the lender's central offices in Siena to insurer Unipol, which would merge them into BPER Banca. BPER, Italy's fifth-largest bank, updated its outlook Thursday, setting a 2028 profit target of about €2.7 billion and cumulative shareholder payouts of roughly €7.5 billion for 2025-2028, positioning itself to become Italy's second-largest banking group if the Intesa-MPS deal proceeds. BPER reported first-half ordinary net profit of €1.33 billion, up 14.7 percent year-on-year on a restated basis.

MPS still sees significant uncertainty over antitrust reviews, including potential remedies regulators could require and assessments linked to Intesa's acquisition of a Generali stake through the deal. The bank's defensive strategy has been complicated by its history — bailed out by the state in 2017, reprivatised in 2023/24, and thrust into the consolidation wave last year when it bought larger peer Mediobanca.

If Intesa succeeds, it would create the euro zone's second-largest listed lender by market value, reshaping Italian banking as UniCredit pursues its own cross-border expansion through Commerzbank. If MPS resists successfully, it would preserve a third major Italian banking player — a scenario the government has actively supported since the reprivatisation. The next milestone is the completion of the Mediobanca integration in the fourth quarter, which would strengthen MPS's standalone case before any final decision on the Intesa offer.

This article is for informational purposes only and does not constitute investment advice.