Dusseldorf The entry of the major French bank Crédit Agricole in the Banco BPM from Italy causes the shares of the entire banking sector to rise before the weekend. The European industry index gained up to two percent in a generally friendly market environment. The Stoxx Europe 600 Banks also rose by two percent.
Stocks from Banca Popolare di Milano gained 14 percent on the Milan Stock Exchange, and those from competitor Unicredit 2.5 percent. Papers from Deutsche Bank and Commerzbank are in the top positions in the Dax and MDax. The shares of Crédit Agricole, on the other hand, give up their gains of up to two percent over the course of the day.
Crédit Agricole announced on Thursday evening that it had acquired a 9.18 percent stake in Italy’s third largest financial institution. According to a statement by Crédit Agricole, the Italians have a strong business model, promising economic prospects and an efficient management team. The transaction strengthens “the solid relationship” between the institutes.
In any case, bank stocks are currently benefiting more from the monetary policy strategy shift of the central banks: Higher capital market interest rates lead to higher income in the lending business. Insurers are also seen as beneficiaries of rising interest rates.
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Prior to this, the outbreak of the war in Ukraine had caused stock prices in the banking sector to plummet and outweighed the positive effects of an impending turnaround in interest rates. In particular, the financial institutions with a strong connection to Russia, such as Société Générale, Unicredit and Raiffeisenbank International (RBI), had to cope with heavy losses.
speculation about a takeover
Consolidation has been discussed and speculated in the European banking industry for a long time. Crédit Agricole’s move prompted speculation that the French might want to take full control of Banco BPM. However, the bank has not applied to regulators for approval to increase the stake to more than 10 percent, the statement said.
In any case, many experts believe that a consolidation process at national level is more likely before major cross-border deals are made. In mid-February, persistent rumors surfaced that the major Italian bank Unicredit was considering taking over Banco BPM. There was no confirmation at the time. In a statement, however, Unicredit spoke of “options” that are being considered.
A lot has happened in the Italian banking market in the recent past. In 2020, the major bank Intesa Sanpaolo and the medium-sized competitor Ubi Banca merged. The Volksbank der Emilia-Romagna (BPER), number five in the market, is about to take over the Savings Bank from Genoa (Carige). Negotiations on a partial sale of the nationalized problem bank Monte dei Paschi (MPS) to Unicredit failed last fall.
Financially, Banco BPM is currently doing well. The money house was able to more than double the adjusted net profit last year to 710 million euros. Revenue also increased slightly, while the proportion of non-performing loans fell from 7.5 percent to 5.6 percent.
More: Unicredit Eyes Banco BPM – Big Takeover Ahead?