UniCredit on Sunday sealed its €22bn acquisition of Capitalia, an all-Italian deal which was concluded at great speed and will give birth to Europe’s second largest bank.

The combined bank will have a market capitalisation of a little over €100bn, second in Europe only to HSBC, and adds to the astonishing changes in Italian banking since the resignation in 2005 of Antonio Fazio, the previous governor of the Bank of Italy.

The autocratic Mr Fazio had a veto on mergers but since his departure there have been six sizeable mergers and acquisitions including Sunday night’s announcement that two mutual banks, Banca Popolare dell’Emilia Romagna and Banca Popolare di Milano, were also combining in a deal valued at €5.65bn ($7.6bn).

The enlarged UniCredit will be second in market share in Italy to the newly-merged Intesa Sanpaolo. UniCredit is paying an equivalent of €8.41 for each Capitalia share, 5.5 per cent above the share price on Friday.

UniCredit estimates €800m in cost synergies and is expecting pre-tax integration costs of €1.1bn. Alessandro Profumo, UniCredit chief executive, said in an interview with the Financial Times that there had been no time for due diligence but that he was confident there would be no large additional restructuring charges.

UniCredit has received overwhelming backing from Italy’s politicians since the agreement cements a large Italian presence in European banking and resolves the battle between Cesare Geronzi, chairman, and Matteo Arpe, chief executive. The two have been feuding over merger strategy for months.

Mr Arpe announced his resignation on Sunday and Mr Geronzi is expected to move to Mediobanca, the investment bank. For now, he is the lead deputy chairman of the combined bank.

Mr Profumo paid tribute to Mr Arpe’s turnround at Capitalia, which has seen a large improvement in performance in recent years. “He has managed the bank well [but] the combination of two chief executives is difficult.”

He said that shareholders are expected to vote on the merger by the end of July and if regulatory approval is received the deal could close by the end of September. A counterbid can not be ruled out however, analysts say.

The deal represents a mixed conclusion to ABN Amro’s foray into Capitalia. The Dutch bank, itself the subject of a takeover battle, is Capitalia’s largest shareholder and had itself been willing to buy the bank. Sunday’s agreement grants four board seats to Capitalia on Unicredit’s 23-person board, but none to ABN.

Mr Profumo had recently been in preliminary talks about a bolder and larger deal with France’s Société Générale, and he admitted the Capitalia deal may not have been his first preference. “There is this opportunity [and] …it’s something positive for us in terms of value creation for our shareholders.”

Capitalia was advised by Claudio Costamagna, the former head of investment banking for Goldman Sachs in Europe. Merrill Lynch advised UniCredit. Citigroup, Rothschild and Credit Suisse were hired by Capitalia to conduct fairness opinions on the deal.

Additional reporting by Peter Thal Larsen in London.

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