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Intesa Sanpaolo bank launches surprise €4.9bn bid for rival UBI

By Amanda Cooper

Merged group would have a 20 per cent market share

Intesa Sanpaolo bank launches surprise  euro 4.9bn bid for rival UBI

Intesa Sanpaolo has made an all-share offer worth €4.9bn (£4bn, $5.3 bn) to smaller regional rival UBI Banca.

The union between Italy’s biggest retail lender and its smaller regional rival would create a banking group with a 20 per cent market share. Combined customer assets would total €1tr, Intesa said.

“Our industry, at a European level, has entered a phase that requires greater scale, increased investment capacity and a focus on socially sustainable finance in order to excel, chief executive Carlo Messina said.

“Thanks to this operation, the bank that will emerge from the integration of Intesa Sanpaolo and UBI will be one of the leaders of the new banking system.”

The merger comes as a surprise. Messina said in January that he saw little scope for merger activity in the European banking industry this year, according to Reuters.

The transaction, under which Intesa will buy all UBI’s 1.143 million outstanding shares at €4.254 each, is expected to go through by the end of this year, subject to regulatory approval, Intesa said.

UBI shares were last up 24 per cent at four-year highs in Milan, while Intesa shares rose around 2.3 per cent.

Intesa said it would take a goodwill impairment charge of around €2bn. This would cover net integration charges of €880m this year and loan loss provisions of €1.2bn relating to UBI’s non-performing loans. The portfolio is worth an estimated €4bn.

The combined group would then benefit from pre-tax savings worth €730m out to 2024.

As part of the deal, the combined group would close between 400 and 500 branches.

According to data from Bloomberg, the merger would create a lender with €8.7bn in net interest income and almost €1 trillion in total assets.

Big M&A deals in Europe’s banking sector have been fairly rare since the 2008-09 financial crisis. Last year, German rivals Deutsche Bank and Commerzbank ditched merger plans on the grounds that any tie-up would have been too risky.

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