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Potential Merger between UniCredit and Banco BPM

UniCredit, Italy's second-largest bank, was reportedly set to make an offer for Banco BPM, the country's third-largest bank, which fell through due to Russia’s invasion of Ukraine in 2022. According to Fabrizio Palenzona, a former UniCredit deputy chairman and the newly appointed chairman of banking foundation Fondazione CRT, such a merger would have "strategic value."

Palenzona revealed that UniCredit's CEO had previously sent him to propose a friendly takeover offer to Banca Popolare di Milano (BPM) as part of a strategy to strengthen UniCredit's position in Lombardy, where it currently lags behind its rivals.

UniCredit operates in over 50 countries, providing a comprehensive range of banking services. The bank has an 11% market share in Lombardy when looking at deposits, which is significantly more than its share of branches at 6%. However, UniCredit has come under increasing pressure since Intesa Sanpaolo's acquisition of UBI, another northern bank, in 2020.

From Sortino’s perspective, the proposed merger with Banco BPM, which controls 12% of Lombardy's banking market, could provide UniCredit with a much-needed opportunity to strengthen its position in the region. Nevertheless, any decision to proceed with the merger would ultimately rest with UniCredit's management, not shareholders.

Written by: Francesco D'Andrea

Sources: Reuters, Financial Times, Yahoo Finance

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