Credit Agricole proposes merger to create Italy’s third-largest bank

MILAN

France’s Credit Agricole has proposed merging its Italian subsidiary with Banco BPM to create Italy’s third-largest banking group, the French lender said on Nov. 9.

Banco BPM said its board would receive an initial briefing on the proposal on Nov. 12.

Credit Agricole, which owns 29.6 percent of Banco BPM, would hold about 45 percent of the combined group. Banco BPM chief executive Giuseppe Castagna would lead the merged bank, which would remain listed in Milan.

The proposal includes a 1 billion-euro special dividend for Banco BPM’s existing shareholders. It would value Banco BPM at a price-to-earnings multiple 20 percent higher than that applied to Credit Agricole’s contributed businesses, based on estimated 2027 earnings.

Credit Agricole estimated annual revenue gains and cost savings of 800 million euros before tax. It projected a 24 percent rise in Banco BPM’s 2027 earnings per share, assuming the projected gains were fully realized.

The combined group would serve 6.5 million customers through more than 2,300 branches. Italy has long sought a third major banking group to challenge market leaders Intesa Sanpaolo and UniCredit.

The deal would require shareholder approval and an exemption allowing Credit Agricole to increase its stake without making a mandatory offer for the remaining Banco BPM shares.

Banking and competition clearances would also be needed, along with approval under Italy’s “golden power” rules governing strategically important transactions.

Credit Agricole said the merger could be completed in the second half of 2027.