Banco Popolare and Banca
Popolare di Milano (BPM) said Thursday that their merger will
create a strong bank that needs all of the employees currently
on the books.
The two lenders agreed to merge on Wednesday to form
Italy's third-biggest bank and the European Central Bank has
given preliminary approval after Verona-based Banco Popolare
agreed to a one-billion-euro capital increase.
"It is absolutely the best possible result," BPM CEO
Giuseppe Castagna, who is set to become the chief executive of
the merged group, said on Thursday.
"A solid bank has been born".
Banco Popolare CEO Pier Francesco Saviotti said that there
will be no redundancies after the merger.
"There won't be any problems regarding the employees,
there won't be any sackings," Saviotti told a news conference.
"Those who leave will do so because they want to take part
in the solidarity funds.
"The employees are our strength, just like the clients
are".
Saviotti said that Banco Popolare had "no alternative" to
a capital increase in the light of the ECB requests, which he
described as "excessive".
Saviotti had previously ruled out a capital increase, but
said the bank would have no trouble raising the money.
The combined bank will have around 171 billion euros in
assets, 2,500 branches and 25,000 staff, meaning only Intesa
Sanpaolo and UniCredit are bigger lenders in Italy.
Banco Popolare's shareholders will have 54% of the new
bank, compared to 46% for BPM shareholders.
The merger comes after the Italian government passed a
reform of the banking industry aimed at encouraging
consolidation in a system many experts consider too fragmented.
Premier Matteo Renzi's government recently had to take
action to save four small lenders - including one in which
Reform Minister Maria Elena Boschi's father was a vice
president.
But the rescue left many investors with worthless shares
and bonds in those banks, leading to a huge furore and
no-confidence motions that the executive had to fend off.
Giuseppe Castagna said the merger will not result in any
spinoffs.
"We are not obligated to make any sales," he told
reporters.
"Obviously there will be some rationalizing," he added.
"It's possible to find some synergies and through them it
will be possible to value some of these assets, including
externally, and in ways we will invent while coming up with an
industrial plan".
Castagna added BPM is not considering any other mergers.
"We face a burdensome task," he said.
"Right now we're concentrating on this merger".
The merger got a frosty reception on the Milan stock
exchange, with BPM's share price losing 5.9% and Banco
Popolare's stock 6.63% down.
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