The Italian government and UniCredit S.p.A. (BIT:UCG) began exclusive discussions and a feasibility study of the long-awaited return to private hands of Banca Monte dei Paschi di Siena S.p.A. (BIT:BMPS), the ailing lender in which the state owns a majority stake. Both parties have approved the prerequisites for a potential transaction, which would be bound by a "carefully defined perimeter and appropriate risk mitigation," UniCredit said July 29, 2021. The bank has long been considered the best buyer for Monte dei Paschi, with the government believed to be seeking to meet UniCredit's terms. A potential deal should be capital-neutral for UniCredit on a pro forma basis and should lead to a "significant accretion" of its EPS in 2023 when after-tax synergies are taken into account.

A deal would also be dependent upon the exclusion of actual or potential extraordinary litigations not related to any ordinary banking activity, as well as the exclusion of nonperforming exposures and the presence of "adequate protection from other potential credit risks," UniCredit said. Monte dei Paschi will open its virtual data room for due diligence, UniCredit said. Additionally, UniCredit noted that Chairman Pier Carlo Padoan, who was Italy's former economy and finance minister, will abstain from playing a role in the transaction.