The torpor of a quiet August week was broken on Thursday when two of Italy’s leading banks announced they were considering a merger.
The FTSE Eurofirst 300 gained 0.1 per cent over the week to 1,359.21, adding
0.1 per cent on Friday.
The boards of Banca Intesa and Sanpaolo IMI will meet on Saturday to discuss a merger of equals.
Major shareholders in the companies are already backing the move ahead of the meeting with Credit Agricole, Intesa’s biggest shareholder, leading the chorus of approval. Brokers were also supportive of the deal that would create Italy’s second biggest bank by assets.
Alessandro Roccati at Fox-Pitt, Kelton estimated about €600m of net merger synergies and few regulatory problems. Domenico Vinci at Goldman Sachs added: “We believe that a potential merger would represent sound industrial logic and offer potential for the creation of meaningful merger synergies and long-term growth opportunities.”
Santander, which owns 8.4 per cent of Sanpaolo, said only that it would make a €1.2bn capital gain if it sold its stake.
Shares in Banca Intesa were up 6.4 per cent over the week to €5.066, while
Sanpaolo climbed 9.4 per cent to €16.101. Credit Agricole added 1.4 per cent to €32.44. Santander slipped 0.7 per cent to €12.
Estimates that as many as 300 branches would be sold after an Intesa-Sanpaolo deal sparked interest in other major Italian banks. “Potential buyers are Capitalia and UniCredit, both keen on expanding their distribution networks,” said Mr Roccati.
Shares in Capitalia rose 5.3 per cent to €6.98, while UniCredit fell 3.4 per cent to €6.093.
Merger speculation spilled over into the broader European banking sector. Commerzbank, the perennial subject of takeover rumour, gained 5.3 per cent over the week to €27.12, while France’s Natexis Banque Populaires added
2.6 per cent to €202.30.
Shares in French defence and telecoms group Safran jumped 9.9 per cent on Friday after the company announced its biggest management reshuffle since it was formed two years ago by the merger of aero engine maker Snecma and Sagem, the defence electronics group. The shares gained 7 per cent over the week to €16.02.
Opap, the Greek gaming group, fell 7.6 per cent on Friday to €27.20, taking its weekly fall to 9 per cent.
The shares were hit by disappointment at a lower-than-expected 28.8 per cent rise in second quarter net profit.
Belgacom bounced after it announced on Friday it was to buy Vodafone’s 25 per cent stake in mobile operator Proximus for €2bn, taking full control of the company. The shares gained 0.9 per cent on Friday, and 4.3 per cent over the week to €27.40.
OMV, the Austrian oil company, had a tough week following the release of disappointing results last Friday. This prompted a number of downgrades, and the stock suffered a weekly fall of 4.3 per cent to €43.26.