Italian bank Sanpaolo may be bought by Italy’s second-biggest lender, Banca Intesa, to create the country’s largest bank in terms of branches. Sanpaolo, based in the northern Italian town of Turin, is valued at 29 billion euros. In a statement posted on its website, Banca Intesa said the merger proposal with Sanpaolo will be put to the respective boards, which are due to meet by the end of this week.
The Bank of Italy’s Governor, Mario Draghi, and prime minister, Romano Prodi, favour a merger. Prodi said it would be “a really great thing for the banking system.” Credit Agricole, which is Intesa’s biggest shareholder, said that it would “examine in detail’‘ any formal proposal.
Credit Agricole, France’s biggest bank by assets, owns almost 18% of Intesa. Other major Intesa shareholders said such a merger makes a lot of sense. A combination of the two bank would create a dominant player in Italy and could set off a long-awaited wave of consolidation in the sector.