Monte dei Paschi di Siena launched simultaneous all-share takeover bids for Banco BPM and Banca Generali on Friday worth about €34 billion, seeking to build a larger Italian banking group and thwart Intesa Sanpaolo’s €36 billion hostile approach.

The Siena-based lender is offering 1.567 newly issued MPS shares for each Banco BPM share and 6.958 shares for each Banca Generali share. The offers value the two targets at approximately €25.3 billion and €8.7 billion respectively.

Reuters reported that MPS is proposing an extraordinary €4 billion distribution to its shareholders, partly in cash and partly through shares in insurer Generali. MPS holds a 13 per cent stake in Generali following its acquisition of Mediobanca last year.

MPS said the combined transactions would create Italy’s third-largest banking group by assets, with a pro-forma balance sheet of roughly €466 billion and more than €810 billion in total financial assets. The bank estimates annual pre-tax synergies of about €2.6 billion, while completion is targeted for mid-February 2027, subject to shareholder and regulatory approval.

The bids represent chief executive Luigi Lovaglio’s most significant attempt to resist Intesa’s unsolicited offer, launched in June. Intesa’s proposed takeover would involve absorbing MPS and selling around half of its approximately 1,260 branches, its historic brand and much of its central infrastructure to insurer Unipol.

MPS’s strategy follows the collapse last month of discussions with Banco BPM over a potential “merger of equals”. The talks were complicated by Crédit Agricole, which holds a significant stake in Banco BPM and had not been involved in the negotiations.

Crédit Agricole deputy chief executive Jérôme Grivet said last month: “Nothing can happen against us or without us.” Banca Generali is similarly complicated by its ownership structure, as insurer Generali controls more than half of the wealth manager and would have to decide whether to tender its stake.

The proposals have drawn political attention as Rome continues to reduce its involvement in MPS after its 2017 nationalisation. Prime minister Giorgia Meloni told Milano Finanza last week that she hoped MPS would not end up “broken up”, losing its name and identity.

The government’s involvement in Italy’s banking consolidation has faced criticism from opposition politicians. Italia Viva senator Ivan Scalfarotto told Euronews that the government should remain neutral, saying: “We are not cheerleaders, we believe in the market: the numbers are what counts, let the best win.”

MPS shareholders are expected to vote on the strategy on 29 October, leaving Lovaglio facing negotiations with investors, regulators and the shareholders of both targets before the proposed February completion date.

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