A Shock That Surprises No One
The Milan investigation into the MPS–Mediobanca affair raises hard questions about market discipline, state conduct and Europe’s financial future. A commentary by Ignazio Angeloni
The reaction that comes most naturally to the news emerging in recent weeks from the Milan prosecutors’ investigation into the MPS–Mediobanca case is shock without surprise.
The wiretaps released so far suggest that there was indeed coordination among shareholders — a concerted action aimed at a common objective — despite repeated denials to the contrary.
They also confirm that the ultimate goal of the operation was to gain control of Generali, via the dual stepping stone of MPS and Mediobanca. That this was the case had been evident to most observers from the outset.
But what appears obvious to market participants is not always sufficient for courts or prudential supervisors. Concrete evidence is required — precisely the kind the Milan magistrates are now seeking to assemble.
For non-specialist readers, a brief clarification is in order. Whether or not shareholders mounting a takeover of a listed company are acting “in concert” matters greatly.
When such coordination exists, shareholders must be treated as a single group, triggering additional obligations and costs to acquire control, in the interest of minority shareholders.
The takeover of Mediobanca proceeded as if no such concert existed, conferring an advantage on the bidders and a corresponding disadvantage on others — and undermining the proper functioning and reputation of Italy’s financial market.
Much of the recent debate has focused on what should or should not have happened.
Among the latter is the conduct of the government, which — if the prosecutors’ hypotheses are confirmed — may have improperly favoured the bidders throughout the process, starting with the privatisation of its stake in Monte dei Paschi di Siena.
But this now matters mainly for ex post judgments on the actors involved. What has happened — including changes in ownership and control — must be taken as a given. The real issue today is what should, or should not, happen next.
There are two fronts to consider, which are — and should remain — distinct: the future of Generali, and the peculiar banking aggregation that has emerged between Mediobanca and MPS.
On the first front, the immediate consequence has been the shelving — perhaps definitively, perhaps not — of the proposed combination between Generali and the French asset management giant Natixis, controlled by BPCE, the group of French cooperative banks.
The deal was championed by Generali’s chief executive Philippe Donnet, but opposed by the MPS–Mediobanca bidders. For now, the latter have prevailed, forcing the project to be rejected. Yet the underlying issue has merely been postponed.
With more than €600bn in assets under management, Generali is a major insurance and asset management group in Italy, but far less so in Europe and globally.
The rankings of global asset managers are telling: among the top 15 worldwide by assets under management, 13 are American, led by giants such as BlackRock and Vanguard, each managing close to or above €10tn. In practice, this means that US firms control European savings — including Italian savings.
The leading eurozone-based groups are both French: Amundi, ranked eighth globally, and Natixis, eighteenth. A combined Generali–Natixis entity would likely rank among the global top ten, marking a meaningful European presence in a sector that is becoming ever more central to the continent’s financial strategy.
In this market structure, what role could an isolated Generali realistically hope to play — perhaps flying the flag of Monte dei Paschi? None. Under no plausible scenario. Least of all if the European Commission’s initiative launched on December 4 to create a “Savings and Investments Union” gains traction. If successful, such a project would favour groups with global reach, diversification, competitive costs, and cutting-edge services.
The message that should reach Italian and European regulators is therefore clear: a combination between Generali and a strong, compatible European partner is in the interest of both Italy and Europe.
It runs counter to that interest only if one assumes — as the Italian government reportedly has, should the prosecutors’ hypotheses be confirmed — that such a deal would somehow allow foreign actors to “steal” Italian savings. On the contrary, the national interest would be even better served if such an aggregation also involved a leading Italian bank, among the top players domestically and in Europe.
As for the future of MPS and Mediobanca — an important issue, though less so than Generali’s — the key role now lies with the ECB’s supervisory arm. Frankfurt had previously given the green light to the Mediobanca takeover, judging that there were insufficient grounds to block it. It stated that it expected, within six months, reassurances on governance and clarity on the industrial plan and synergies. That deadline is now approaching.
Shortly after the Christmas break, the operational leaders of the two banks will have to explain to supervisors — now understandably more cautious in light of recent revelations — that what occurred was not merely a power play serving other ends, but a genuine industrial project.
They will need to show how a combination of two banks so different in history, culture, and business model can make sense and create value.
Best of luck to them. It will not be an easy task.
An Italian version of this article was published by Milano Finanza
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
