Crédit Agricole proposes Banco BPM merger to create Italy's third-largest bank

(Sharecast News) - Crédit Agricole has proposed a merger between its Italian banking operations and part-owned Banco BPM that would create Italy's third-largest banking group, serving 6.5 million customers across more than 2,300 branches.

The French banking giant said on Monday that it had approached Banco BPM about a potential combination with Crédit Agricole Italia, offering a 20% valuation premium and a �1bn extraordinary dividend to Banco BPM's existing shareholders.

The proposed deal, which has been submitted to Banco BPM's board for consideration, would generate estimated annual pre-tax synergies of �800m and boost Banco BPM's earnings per share by approximately 24% in 2027, based on those synergies.

Crédit Agricole, which currently owns 29.6% of Banco BPM, would increase its holding to approximately 45% of the combined entity through the transaction.

The merged bank would retain Banco BPM's identity and remain listed in Milan, with its existing chief executive continuing to lead the business. Its board would also maintain a majority of independent directors.

Crédit Agricole said the merger would combine the banks' established Italian branch networks with its broader expertise in insurance, asset management and specialist financial services, strengthening their ability to support households and businesses.

The proposal would also incorporate Crédit Agricole's Italian life and non-life insurance operations.

The deal would require approval from Banco BPM shareholders, as well as regulatory clearance from the European Central Bank and Italian authorities under the country's golden power rules.

Shareholder approval would also be needed for an exemption from the requirement for Crédit Agricole to launch a mandatory takeover offer.

Banco BPM shares were up over 11% at �14.96 in early deals in Milan, while Crédit Agricole fell 1.4% to �15.62.