Crédit Agricole Proposes Merging Its Italian Bank Into Banco BPM

Crédit Agricole SA proposed on Monday to merge its Italian banking arm into Banco BPM SpA, a deal that would create Italy’s third-largest banking group and lift the French lender’s stake in the Milan bank to about 45% from 29.6% without a full takeover bid. Banco BPM shares jumped more than 9% in early trading.

The combined bank would serve about 6.5 million customers through more than 2,300 branches. It would be built around Banco BPM, stay listed in Milan and keep Banco BPM Chief Executive Giuseppe Castagna in charge, with a board made up mostly of independent directors. Crédit Agricole would also contribute its Italian life and property-casualty insurance businesses. The French bank called the approach friendly and sent it to Banco BPM’s board for review.

A premium measured on earnings

Rather than offering a premium to Banco BPM’s share price, Crédit Agricole set an exchange ratio that values Banco BPM 20% richer than its own contributed businesses on estimated 2027 earnings multiples. Banco BPM’s current shareholders would also receive a special dividend of 1 billion euros, or roughly $1.1 billion. Crédit Agricole estimates pretax synergies of 800 million euros a year and says the deal would raise Banco BPM’s 2027 earnings per share by about 24%.

The structure is built to avoid a mandatory tender offer. Banco BPM holders would have to approve the merger by a two-thirds majority at an extraordinary meeting, and the waiver also fails if most of the independent shareholders present vote against it. The deal would need sign-off from the European Central Bank and clearance under Italy’s golden-power rules, which let Rome intervene in strategic transactions. Crédit Agricole said the merger could be completed in the second half of 2027.

Italy’s consolidation race

The bid lands weeks after Monte dei Paschi di Siena shareholders rejected a defensive plan centered on Banco BPM, a vote that cleared the way for Intesa Sanpaolo’s pursuit of the Siena lender. Rome has long wanted a third national champion to challenge Intesa and UniCredit, and Crédit Agricole is now offering to build one with Banco BPM at the center.