Italy Sells More BMPS; Consolidation Would Be Credit Positive

Italy sold a further 12.5% stake in Monte Paschi (BMPS IM) yesterday, for c.EUR650m. Banking consolidation in Italy is needed, and would be credit positive, but these remain politically sensitive situations therefore unlikely to be large, short-term catalysts.

• Italy still holds 26.7% of BMPS but this stake sale was at a significant (40%+) premium to the last sale in Nov-23. Monte Paschi has been in trouble since the 2008-9 financial crisis with a range of bail-outs culminating in a nationalisation in 2017. Italy has been trying to offload the stake, either to a trade buyer or investors, for some time.
• Italy is a relatively fragmented banking market but there are a range of banking foundations, often with local politicians involved, which hold stakes in several of the smaller banks, often seen as targets. This politicisation of the system has long been a barrier to consolidation.
• The most sensible acquirers would be one of the two Italian majors with Unicredit viewed as more likely buyer. Banco BPM (BAMI IM), BPER (BPE IM) and BMPS are all seen as targets with an outside possibility that BMPS is actually bought by one of the former two, in our view.