The Italian investment bank is in the process of transferring at least five of its 15-strong M&A team in London to its Milan headquarters, with the vast majority specialising in financial services deals, the sources said, speaking on condition of anonymity as the matter is confidential.
It comes as Britain is nearing the end of the Brexit transition period on Dec. 31 and global banks are scrambling to beef up EU outposts amid the risk of a no-deal break-up.
Meanwhile, at its historic Milanese headquarters in Piazzetta Cuccia - named after founder Enrico Cuccia - Mediobanca's rainmaker Francesco Canzonieri - who heads the bank's corporate and investment banking business - is in the process of leaving, the sources said.
Canzonieri handed in his notice earlier this month and he is looking to set up his own business next year, they said.
Mediobanca declined to comment.
Established in 1946 to support post-war reconstruction in Italy, Mediobanca has failed over the years to expand overseas where despite offices in London, Paris, Madrid and Frankfurt, it has struggled to carve out a significant market share in Europe.
Mediobanca ranks 23rd in European M&A league tables so far this year, while it tops Italian league tables ahead of JPMorgan and Goldman Sachs, Refinitiv data shows.
"Expanding abroad would have meant a lot of dedication and a real commitment which they never really had," a source familiar with the bank's strategy said.
Among those relocating to Milan are Mediobanca's co-head of the financial services group (FIG) for Italy and Greece, Francesco Rossitto, as well as FIG director for Europe, the Middle East and Africa, Riccardo Ruggeri, the sources said.
Luca Mangiagalli, Mediobanca's co-head of sponsor solutions for Italy, is also set to move to Milan along with executive director Damiano Ventola.
French banker Benoit Weill, a managing director specialising in FIG, will swap London for Paris, they said.
The moves will leave Mediobanca's boss Alberto Nagel, who splits his time between Milan and London, with roughly 10 dealmakers in Britain, mostly focusing on equity capital market business.
Its London headcount will shrink to about 50 overall, covering anything from sales, research and debt capital markets, the sources said.
CANZONIERI ON WAY OUT
Canzonieri, who was publicly praised by Intesa Sanpaolo boss Carlo Messina for engineering its takeover of UBI, is known as a shrewd deal-maker who may lure junior bankers to his new venture which will focus on both advisory and direct investments, the sources said.
"It is a real loss. Canzonieri is not soft-spoken but he is a real character and when it comes to M&A, it is all that matters," one of the sources said.
"An entrepreneur sees ten of us and we all look and sound more or less the same, then Canzonieri comes along and he's so strikingly different that he can't help but make an impression," said a source at a rival bank.
Canzonieri's move follows the exit of French dealmaker Erik Maris, co-founder of Paris-based investment banking boutique Messier Maris & Associés, in which Mediobanca bought a 68% stake last year to boost its presence in France.
Losing two star bankers in just a few months while relocating people to Milan with no clarity on the new leadership after Canzonieri's exit may draw scrutiny from Mediobanca's top shareholder Leonardo Del Vecchio - the 85-year old Italian eyewear tycoon who holds just over 10% of the bank.
Last year, Del Vecchio urged Mediobanca to expand its investment banking business to become a leader in Italy and Europe while reducing its dependence on consumer finance and income from its 13% Generali stake.
Nagel, who has led the bank since 2008, has moved it away from its roots as a financial holding company and boosted its wealth management and consumer credit businesses.
In October, institutional investors backed Nagel for three more years as CEO. At the shareholder meeting, Del Vecchio voted in favour of directors put forward by a group of professional investors but did not back the list which included Nagel.
(Reporting by Pamela Barbaglia in London; additional reporting by Valentina Za, Stephen Jewkes and Gianluca Semeraro in Milan and Gwenaelle Barzic in Paris. Editing by Jane Merriman)
By Pamela Barbaglia