Monte dei Paschi rebuffs Intesa bid as profit rises 27%

Banca Monte dei Paschi di Siena defended its value and strategic importance on Friday as it fought a 31-billion-euro hostile bid from rival Intesa Sanpaolo and reported higher second-quarter profit.

The Italian bank posted net profit of 610 million euros, up 27% from a year earlier. Revenue rose 5.3% to 2.06 billion euros, driven by higher fees and commissions.

Chief Executive Luigi Lovaglio repeated his argument that Intesa's bid was inadequate. He said Monte dei Paschi was a “strategic asset for the Italian economy” and that a merger with Intesa would hurt not only shareholders but the Italian economy.

Lovaglio said the bank's capital position was “one of the reasons why Monte dei Paschi can evaluate every strategic option from a position of strength”.

Monte dei Paschi said Intesa's 12.5% premium was far below the 30% to 41% range in comparable earlier deals. Intesa launched its hostile bid in June, opening another round of consolidation in Italy's banking sector.

Intesa says the tie-up would create the second-largest banking group in the eurozone by market capitalisation, with a network of about 3,000 branches.

Monte dei Paschi acquired Mediobanca last year, making it Italy's third-largest bank. Banco BPM had also proposed a “merger of equals” with Monte dei Paschi, but halted discussions last week, saying conditions had not materialised to reach a deal.

Founded in Siena in 1472, Monte dei Paschi was rescued in 2017 in a 5.4-billion-euro bailout by the Italian state, which later reduced its stake.