Luigi Lovaglio returns to MPS leadership with bold plan to unlock €7.4bn Generali stake and reshape Italy’s banking landscape
Monte dei Paschi di Siena’s leader, Luigi Lovaglio, is contemplating the sale of a €7.4bn stake in Generali to aid in financing the acquisition of Banco BPM, reviving the Italian government’s previous goal of merging the two banks to form a national banking champion.
Five people with knowledge of the talks said Lovaglio ultimately wanted to sell the 13 per cent stake in Generali owned by Mediobanca, which MPS acquired last year, to long-term Italian investors. The proceeds would help fund a tie-up between MPS and Banco BPM.
Lovaglio was reinstated last week as chief executive of MPS, less than a month after the bank’s outgoing board ousted him because of disagreements over strategy, including the future of the Generali stake.
Generali is one of the largest long-term investors in Italian sovereign debt and regarded as a strategic asset.
Investors are split on the merits of selling Mediobanca’s Generali stake, although there is broader support for a deal with Banco BPM, the people said.
Prime Minister Giorgia Meloni’s government last year opposed the insurer’s asset management joint venture with Natixis, fearing its governance structure would give the French group the upper hand and undermine Generali’s role as a stable investor in Italian bonds.
Two of the people said Lovaglio was mindful of the government’s concerns and planned to “secure” Generali’s stake before pressing ahead with a two-year-old plan to merge MPS with its Milan-based rival Banco BPM.
The sale would also give MPS extra firepower to offer a premium to Banco BPM shareholders, the two people said.
People close to the discussions said the priority was to merge and delist Mediobanca. They also cautioned the board’s first meeting on Thursday had proven “difficult” so any initiative on a “sensitive topic like Generali” would have to wait.
Other people familiar with talks with investors added that Lovaglio had yet to discuss his thinking on a potential sale with some big shareholders.
Luigi Lovaglio was reinstated last week as chief executive of MPS © Betty Laura Zapata/Bloomberg
But Lovaglio’s unexpected comeback suggested there was an “alignment on the vision for the group’s future,” said one of the people, with Banco BPM among the investors which backed his return.
The Italian government, which still owns a small stake in MPS, abstained from the vote signalling it did not oppose Lovaglio’s return. The five people said Rome had still not given up on its initial idea to combine MPS and Banco BPM.
“The priority for the government is for the Generali stake to end up in safe hands because it considers the insurer a national strategic asset,” said one of the people.
Intesa Sanpaolo or UniCredit would be the preferred buyers, the people said, but both have drawbacks.
UniCredit is locked in a battle for the control of Commerzbank in Germany, while Intesa is already Italy’s biggest bank and has the largest life insurance business in the country, raising potential antitrust issues. Intesa’s chief executive has also ruled out any interest in taking “minority” stakes.
Another option under discussion is to distribute the stake in Generali to MPS shareholders by way of a special dividend rather than selling it, two people familiar with the proposal said.
After MPS was privatised in 2024, government plans for a tie-up with Banco BPM were upended by a takeover bid for BPM from UniCredit, which set off a chain reaction across Italian banking.
Crédit Agricole raised its stake in Banco BPM to 20 per cent, while Lovaglio surprised analysts and investors by launching a bid for the bigger Mediobanca instead.
The Italian government later blocked UniCredit’s bid for Banco BPM, and chief Andrea Orcel shifted his focus to Germany’s Commerzbank. However, he also built a stake in insurer Generali which he recently increased to just under 9 per cent.
MPS declined to comment prior to publication of this article. Following publication, MPS said that it is not examining the sale of the stake in Generali and is entirely focused on the process of merging and integrating with Mediobanca.
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