The white smoke on the merger projects of Banca Popolare di Milano it is not there yet, but the number one of the bank of the Lombard capital, Giuseppe Castagna, wants to tighten and aims to reach a pre-agreement in a few weeks after the formal offers of potential partners have arrived i.e. del Banco Popolare need Ubi. This is the gist of yesterday's Bpm board meeting.
Although the game of alliances remains open and does not exclude twists in the final, the route of the Bpm, which aims at a merger of equals, is clear and highlights a preferential lane towards Banco Popolare for at least three reasons:
1) because the Stock Exchange values are close enough and this allows for a merger between equals;
2) because the head office of the new bank would remain in Milan;
3) because the proposed governance would entrust Castagna with the managerial leadership of the bank, reserving the presidency to Fratta Pasini from Verona and the role of head of the executive committee to CEO of Verona Saviotti.
However, there is the crux of problem loans and non-performing loans on which, not surprisingly, the ECB investigation was launched yesterday, alarming investors in Italian banks. Banco Popolare has 14 billion non-performing loans against BPM's 3,7 non-performing loans and this strengthens the negotiating power of the Milanese Popolare to which Ubi, which has fewer non-performing loans than the Veronese and a higher stock market value, however has not yet renounced and perhaps will decide better what to do after the mission to Frankfurt of CEO Victor Massiah.
