Crédit Agricole

Company Update:
According to Reuters, CASA is rumored to consider a joint takeover of Banco BPM together with UniCredit, with the aim of breaking up the bank and taking around one-third of the bank’s branch network. According to the same sources, this potential takeover would have been discussed with Italian authorities.

We see this potential move as positive for CASA as this would secure the French bank’s JVs (consumer finance, insurance) with Banco BPM and allow CA Italia to reach a critical size in the country without costing too much additional capital (CASA already owns close to 30% of Banco BPM’s share capital).

On the other hand, the deal, if executed, could pose new technical difficulties, including the integration of Banco BPM’s physical branches into CA Italia as well as an IT merger, with potential additional integration costs being front-loaded and synergies being back-loaded.

In terms of probability, we judge the deal as having low odds of occurring, as a breakup of Banco BPM could be perceived as more politically costly for the Italian government, as a French bank would be one of the beneficiaries, and past Unicredit’s bid on Banco BPM was politically blocked by Meloni.

Expert Opinion:
The Italian adventures of Crédit Agricole are interesting from a news flow standpoint but isn't really meaningful on financials. We believe the issues regarding the French political and economic situation far outweigh the potential benefits of the (unlikely) deal around Banco BPM  and we would not go long French banks at the moment (even though the long CASA makes sense to hedge a short in GLE OR BNP). 

On  the Italian front, this rumor will likely add pressure on Banco Monte de Paschi di Sienna, as the deal with Banco BPM, which is presented as a merger of equals, would be different if there was an alternative offer. And it is therefore more favorable for Intesa.

In fairness, we try to keep up with the Italian market's developments, but we are getting increasingly lost in the power struggles within the Italian intelligentsia. But please book a call with our Bank specialists if you want a really informed opinion. 


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