Intesa Posts Higher Q3 Profit Ahead of €33 Billion Bid for Monte Paschi

Q3 results in focus

Intesa reported €2.65 billion in profit for the September quarter, roughly a 12% gain from last year and ahead of the average estimate of €2.49 billion.

Lending and fee income grew, helped by higher loan volumes and recent increases in interest rates. Revenue came in below forecasts, and the bank booked a €27 million loss from trading. By late afternoon in Milan, the stock was up 1.2% at 4:46 p.m.

The bid for Monte Paschi

Messina is moving toward a takeover of Banca Monte dei Paschi di Siena in a deal that would be among Italy's biggest and reinforce Intesa's lead in domestic banking. An investor presentation states that Messina will present the proposal to Monte Paschi's shareholders by month-end.

Regulatory steps are lining up. The European Central Bank has authorized Intesa to assume control of Monte Paschi, while antitrust clearance is still outstanding but not required to start the offer. The bank expects to file its bid with Monte Paschi investors soon.

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Terms, tweaks, and backers

The previous terms were 1.6 of Intesa's own shares together with €1.25 in cash for each Monte Paschi share, putting the valuation at roughly €32.7 billion based on Monday's close, compared with a market capitalization of €33.3 billion. Because of the interim dividend, Intesa will adjust the equity leg to 1.664 shares to keep the economic value unchanged.

Two key shareholders have already signaled support: Delfin Sarl with roughly 17.5% and Edizione Holding SpA with about 1.5% of Monte Paschi say they will tender. A counterpush by Monte Paschi CEO Luigi Lovaglio fell flat last week, when shareholders overwhelmingly rejected his plans to pursue alternative deals for Banco BPM SpA and Banca Generali SpA.

Why it matters for investors

"We have rapidly obtained all the required banking and financial regulatory approvals to acquire" Monte Paschi, Messina said, adding that the strategy is to "strengthen the group's ability to manage and grow household savings, support Italian businesses as they expand at home and internationally, and compete more effectively in Europe." In plain English: stronger earnings, a big interim dividend, and a clearer path to the largest domestic footprint set the stage for how Italy's banking landscape - and Intesa's scale - could look after the vote.

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