Intesa's UBI Deal Sounds Wake-up Call For Italy's Banks

Intesa Sanpaolo’s victorious battle for rival UBI has sent shockwaves through Italy’s fragile banking sector as financiers try and work out who will be next in an industry ripe for consolidation, Reuters reported. The unsolicited bid, Europe’s largest banking deal in a decade, has set the stage for further mergers in the fragmented sector as pandemic-induced losses mount, adding to lenders’ existing struggles with negative interest rates and the need to adapt to a fast-changing digital world. Analysts say the European Central Bank’s support for the UBI bid and Intesa’s use of “badwill” – buying UBI at a discount to its net book value and pocketing the gap as profit – could encourage more banks to pursue tie-ups as a way to cut costs. “The Intesa deal has ushered in a new phase,” an Italian banker said. “We now know that hostile banking takeovers aren’t just possible but can succeed.” Read more

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