Italy Seeks Strategic Buyer for Monte dei Paschi Stake Before Year-End Deadline

MILAN (Reuters) – Italy is struggling to find a "strategic" buyer for its stake in lender Monte dei Paschi di Siena (MPS) before a year-end deadline. The government is left with little alternative but to broaden a fragmented shareholder base, according to two sources close to the sale process.

Italy must cut its 26.7% stake below 20% by the end of December to show European Union authorities it no longer controls MPS, in line with re-privatisation commitments made during a 2017 bailout. The original EU deadline was extended after Italy failed to sell MPS to UniCredit in 2021.

The government believes a strategic buyer, preferably another Italian bank, would best guarantee MPS' future, and banking supervisors also favor this option. However, MPS shares have more than doubled over the past two years, reducing appeal for competitors.

Without a merger, long-term shareholders, specifically banking foundations, are viewed as preferable to investment funds, but efforts to secure such buyers have not yielded positive outcomes, the sources said.

The Treasury is likely to conduct another market placement where shares are typically sold to multiple investors at the highest price. MPS declined to comment, and a Treasury spokesperson reiterated a profile of strict confidentiality for the sale process.

Italy's plans align with several euro zone governments' intentions to cut their holdings in banks rescued after the 2008-2009 financial crisis, with most sales occurring through accelerated book building (ABB) methods.

This month, the Dutch government announced a reduction in its ABN Amro stake, and Germany sold a 4.5% Commerzbank stake which was acquired by UniCredit. Economy Minister Giancarlo Giorgetti stated the Treasury would reduce its MPS stake this year.

Italy has already gained nearly 1.6 billion euros ($1.7 billion) by lowering its original 64% MPS stake and a further 10% sale could yield 640 million euros at current market prices.

Banco BPM, Italy's third-largest bank, is often viewed by Rome as the best fit for MPS. The Treasury has attempted to secure an approach from BPM, whose main investor is France's Credit Agricole, but CEO Giuseppe Castagna has declined to engage.

Banco BPM has consistently denied any interest in MPS and did not comment on the matter.

Giorgetti and Prime Minister Giorgia Meloni asserted that the privatisation of MPS should contribute to the establishment of a third large banking group, alongside Intesa Sanpaolo and UniCredit. Italy's fourth-largest bank by assets, BPER, is also considered for this initiative.

BPER's leading shareholder, insurer Unipol, indicated it could take a stake in MPS if Unipol replaced France’s AXA as MPS’s insurance partner. However, sources noted that there were no active discussions between the Treasury and Unipol, with both waiting for the other to initiate talks.

($1 = 0.9249 euros)

(This story has been refiled to fix the headline)