Intesa’s UBI Banca takeover has Mediobanca’s fingerprints all over it

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By:
Dominic O’Neill
Published on:

Intesa Sanpaolo’s €4.9 billion raid on UBI Banca could inspire similar deals, but it’s an eminently Italian takeover, not least due to the role of Alberto Nagel’s Mediobanca.

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Intesa Sanpaolo’s surprise bid for UBI Banca has stunned the financial community in Milan and beyond. At €4.9 billion, it’s Europe’s biggest bank takeover bid for a decade. It looks like a throwback to a different era in banking. 

Financial sector insiders say it could even mark a return to hostile bank takeovers – something not seen in Europe since some of the disastrous deals of the mid-2000s.

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Victor Massiah, UBI Banca

As the deal comes at about a 30% premium to UBI’s valuation prior to the announcement, chief executive Victor Massiah would be well-advised to accept the offer, a prominent bank investor tells Euromoney. 

Whether or not Massiah agrees, the bid was neither requested nor anticipated by UBI – nor almost anyone else. It happened without any of the lengthy horse-trading with the target’s regional powerbrokers that would usually precede a mid-tier bank takeover in Italy. 

The fact that Intesa’s shares rose after the announcement, albeit only by a couple of percentage points, will give ammunition to the growing advocates of more bank consolidation across Europe.

Yet this deal will be hard to replicate elsewhere, not least because of the role of Mediobanca, Italy’s biggest investment bank. 

Until a couple of weeks ago, UBI, which is based near Milan, was negotiating a merger with Emilia Romagna-based BPER Banca, in a deal that would have united Italy’s fifth and sixth biggest banks by assets. With Massiah hesitating over concern about the influence of BPER’s main shareholders – according to an adviser on that deal – Mediobanca seems to have pitched the deal instead to Intesa’s chief executive Carlo Messina.

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Carlo Messina, Intesa

As Mediobanca is the sole financial adviser to Intesa, the deal is almost entirely its making. And while Intesa could have effectively acted on its own in another deal, in this case the investment bank’s influence was instrumental. 

“It was engineered by people who know all the constituents,” says a senior Italian investment banker.

The deal, says the source, has all the hallmarks of Mediobanca’s ruthless ability to get deals done in Italy by leveraging its extraordinary links to other local financial institutions and big corporations: in this case including BPER, which it has recently advised on various transactions, and perhaps most importantly Unipol. 

The latter was a key shareholder in Mediobanca until early last decade, when the investment bank masterminded a four-way merger that made Unipol Italy’s second biggest insurer.

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Alberto Nagel, Mediobanca

As Intesa already has the biggest market share in Italy, the plan is for BPER to buy between 400 and 500 UBI branches, allowing Intesa to pre-empt competition concerns and BPER to gain bulk, increasing its assets by about 30%. 

Mediobanca is acting as sole global coordinator on BPER’s €1 billion rights issue to fund that acquisition. At the same time, Unipol – which is BPER’s biggest shareholder, with 20% – is buying the bancassurance activities tied to those branches.

The deal also shows how close Mediobanca and its chief executive Alberto Nagel have grown to Messina and company, especially relative to archrival UniCredit

Rival investment bankers pitched UniCredit chief executive Jean Pierre Mustier the UBI deal after the BPER tie-up floundered – and he rejected it. Mustier repeated his lack of intention to do M&A in a letter to employees after Intesa’s announcement, adding that the bank would “not be drawn into any transactions”.

UniCredit was Mediobanca’s largest shareholder until it sold out late last year, just as billionaire Leonardo del Vecchio built a roughly equivalent stake, much to Nagel’s unease. That followed tension between Mediobanca and del Vecchio in 2018, when Mustier acted in concert with the billionaire over the latter’s plans to invest in an oncology institute in Milan, which the institute’s other big shareholders – Mediobanca, followed by Unipol and Intesa – were more suspicious about.

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Jean Pierre Mustier, UniCredit

Now, if the UBI takeover goes ahead, UniCredit will no longer be Italy’s biggest bank by assets, as around €200 billion of UBI assets will bring Intesa’s total to over €1 trillion. 

Intesa says combining the two groups will save more than €700 million a year, and according to research from Deutsche Bank, the takeover will only strengthen Intesa’s dividend generosity. 

An accompanying plan to offload €4 billion of UBI non-performing loans should further please supervisors at the European Central Bank.

Meanwhile, it makes Massiah look like he’s lost his seat. Given its bigger market capitalization, UBI would have effectively been the acquirer in a BPER merger. 

In previous conversations with Euromoney, Massiah showed himself determined for the bank not to be subsumed. He was more cautious than other mid-tier Italian banks about mergers with peers – understandably, given UBI’s better asset quality.

But as one investment banker recently told Euromoney, UBI could have a chance of rivalling Intesa's Italian leadership if it actively pursued mergers – perhaps even taking the best bits of Banca Monte dei Paschi di Siena, if the European Union allowed the state to take more of the latter’s non-performing loans. 

Instead, UBI risks being consigned to history, while the three-year strategy Massiah unveiled on the same day as Intesa announced its bid looks embarrassingly irrelevant.