Italy’s ‘casse di previdenza’ have been forced to defend their investments into domestic banks, on the eve of controversial M&A between key banks
Italian first-pillar pension funds have been caught in the crossfire of questions surrounding the controversial takeover battles potentially reshaping the Italian banking sector, due to their role as shareholders in Monte dei Paschi di Siena (MPS), Mediobanca and Banco Popolare Milano (BPM).
Their investments make the ‘casse di previdenza’ instrumental for the takeover launched by Monte dei Paschi di Siena for Mediobanca, and Mediobanca’s bid to acquire Banca Generali.
Enpam, the €27bn pension fund for doctors, has a 2% stake in MPS, while Enasarco, the €9bn pension fund for sales representatives, holds 3% in the Tuscan bank through its asset management company Miria.
Cassa Forense, the €19bn lawyers’ pension fund, and Enpam hold a 1% and a 2% stake, respectively, in Mediobanca. Enasarco, Inarcassa and Enpam are also shareholders of BPM, which has a stake in MPS, according to reports and statements by the banks.
Enpam openly backed a capital increase at MPS needed for the takeover of Mediobanca. The capital increase was approved yesterday, after MPS received the green light from the European Central Bank (ECB) for the hostile takeover of the Milan-based rival. In the shareholders’ debate on the matter, Enpam sided with Norges Bank, also a shareholder in MPS.
The M&A activity triggered a parliamentary inquiry over the potential risks for pension fund members, forcing them to defend their investment decisions.
Enpam’s president Alberto Oliveti pointed to the value of the pension fund’s investment in MPS, which has increased by €115m. Enpam’s investment in BPM rose five-fold, said Oliveti.
The €16bn pension fund for engineers and architects, Inarcassa, was forced to unveil that it had sold its stake in MPS in March 2024, and it is not a shareholder in Mediobanca.
Inarcassa also said that its 1.03% stake in BPM, valued at €150m, was built between 2021 and 2024, well before the announcement of Mediobanca´s takeover plan.
For Jérémie Boudinet, head of financial and subordinated debt at Crédit Mutuel Asset Management, the takeover of Mediobanca by MPS will not benefit shareholders.
“We do not see a lot of synergies [between the banks], and we fear that key bankers could leave Mediobanca. Beyond that, shareholder activism by the state, along with impatient CEOs, has a bad influence on the Italian financial sector, as all actors are now trying to buy other institutions just to avoid becoming prey,” he said.
European M&A banking activity has increased in recent months, partly driven by the attempt of another Italian lender, Unicredit, to acquire Germany’s Commerzbank.
“There is much more of a mindset that European banks are value rather than growth plays”
James Macdonald at BlueBay Asset Management
“There is much more of a mindset that European banks are value rather than growth plays,” said James Macdonald, senior portfolio manager at BlueBay Asset Management.
“This is bringing much more financial discipline into M&A considerations than we perhaps saw in the past, which is good for creditors, good for shareholders and ultimately good for the financial system within Europe.”
Meanwhile, the market for AT1 bonds – convertible fixed income securities issued by banks to raise their capital base – has reacted to the heightened probability of mergers by pricing in transactions, he added.
Mediocanca and MPS have not issued AT1 bonds so far.
“In the event of a takeover of Mediobanca, we see the merged entity as a strong candidate for an inaugural AT1 issue, that should attract many investors, since it would be a new name, that would benefit from a scarcity effect,” added Boudinet.
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