How Italian banks built new foundations
Rarely has a country’s banking system experienced such an overhaul in such a short space of time as Italy’s has over the past 12 months. The urge to merge has made banks team up with local rivals to avoid being gobbled up by a foreign competitor. The foundation ownership system set up in the 1990s is losing its grip. Peter Koh reports from Milan and Rome.
ON JULY 12 2006, Mario Draghi, the governor of the Banca d’Italia, gave a speech at the annual meeting of the Associazione Bancaria Italiana in which he urged the chairmen and managing directors of Italy’s banks to consolidate for their own good or look on as foreign players took an even greater share of the market.
After the takeovers of Antonveneta by ABN Amro and Banca Nazionale de Lavoro by BNP Paribas, completed earlier in the year, Italian bankers hardly needed reminding of the problem by the central bank governor.
Clearly, though, his audience must have been paying close attention. Less than three months later, Banca Intesa and Sanpaolo IMI, the country’s second- and third-largest banks, announced their intention to merge, in a €65 billion deal. The market applauded the industrial logic of the deal, which will create one of the largest eurozone banks and the largest player domestically in Italy, even though the transaction was cobbled together in less than a month.