Moody's backs Intesa's bid for MPS but warns of risks for BPER

(Alliance News) : Moody's Ratings, in a note released Thursday, believes that the voluntary exchange offer launched by Intesa Sanpaolo for Banca Monte dei Paschi di Siena will have no immediate impact on the ratings of the bank led by Carlo Messina, though it could have positive implications for MPS and Mediobanca.

The agency, however, highlighted potential execution risks for BPER Banca related to the planned integration of a portion of MPS's operations.

The offer announced on June 8 values MPS at approximately €30.6bn and includes a stock component and a cash portion equal to about 10% of the total consideration, representing a 12.5% premium over the closing price of MPS stock on June 5.

The transaction is contingent on reaching at least two-thirds of MPS's capital and obtaining the necessary regulatory and antitrust approvals, with completion expected by the end of 2026.

The binding agreement between Intesa Sanpaolo and Unipol provides for the sale to the latter of a bank resulting from the spin-off of MPS, including the Monte dei Paschi brand, approximately half of the branch network, less than a third of customer loans excluding non-performing loans, and about a third of direct deposits.

This entity would subsequently be merged with BPER Banca to create Italy's second-largest banking group by domestic presence, while retaining the Banca Monte dei Paschi brand.

According to Moody's, the deal would significantly strengthen Intesa Sanpaolo's position in wealth management, consumer credit, and corporate and investment banking.

The bank would also retain Mediobanca's private banking and wealth management activities, the Compass consumer credit business, Mediobanca's 13% financial stake in Generali, the online bank Widiba, and approximately half of the MPS retail network.

For BPER, the agency recognizes the potential increase in size, with an expansion of approximately one-third of its operating scale, but emphasizes the risks associated with an integration of such transformative scope.

Moody's specifically pointed to the complexities involved in migrating infrastructure and IT systems, as well as the potential implications for the new group's capital, liquidity, and liability structure.

For MPS, however, the transaction could result in an improved credit rating if its bonds were transferred to Intesa Sanpaolo or BPER, allowing creditors to benefit from the stronger credit profiles of the two institutions.

Intesa shares closed Thursday up 0.1% at €5.559 per share, MPS rose 0.3% to €10.31, while BPER Banca ended up 0.6% at €12.722.

By Antonio Di Giorgio, Alliance News reporter

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