Will Italy's Monte dei Paschi Be Acquired by a Domestic Bank?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] The Italian bank Monte dei Paschi di Siena (MPS) is increasingly likely to be acquired by the domestic bank UniCredit.

Founded in 1472, MPS is the oldest bank in the world and is considered one of Italy's three major banks alongside UniCredit and Intesa Sanpaolo.

On the 29th (local time), UniCredit announced that it would hold exclusive negotiations with the Italian government for the acquisition of MPS, according to major foreign media reports.

The Italian government is said to have identified UniCredit as the optimal acquisition candidate for MPS, which received a bailout of 5.4 billion euros (approximately 7.3511 trillion KRW) in 2017.

UniCredit CEO Andrea Orcel said, "We have just started due diligence and have not yet entered negotiations." However, a source told foreign media, "The Italian government believes an agreement will be reached and a draft has already been prepared."

MPS faced bankruptcy in 2017 due to accumulated non-performing loans. At that time, it was considered a potential trigger for a financial crisis originating in Italy, prompting the government to inject public funds, acquire a 68% stake, and carry out restructuring. The Italian government set a policy to sell last year and has been seeking acquisition candidates.