Banco BPM moves ahead on Credit Agricole talks

Banco BPM has moved its potential merger with Crédit Agricole Italia into a formal negotiation phase after its board met in Milan and reviewed a proposal letter dated November 8. Directors gave Chief Executive Giuseppe Castagna a mandate to test whether the conditions for a deal exist and began a detailed review of the plan, while the bank’s related-parties committee started its own assessment. Banco BPM said the transaction would create a banking group of primary standing but also stressed that any agreement must adequately compensate shareholders, as the combined structure would leave Crédit Agricole with effective control.

The board highlighted that a merger would deprive Banco BPM of its appeal as a takeover target, a factor that has supported its share price as potential buyers such as UniCredit and Monte dei Paschi examined the bank in recent years. As a result, Banco BPM stated that the terms of any proposal put to investors must reflect both this loss of contestability and the strengths of its business model, so as to secure the broadest possible support among shareholders.

Crédit Agricole, which currently owns 29.6% of Banco BPM, has proposed combining Banco BPM with Crédit Agricole Italia and contributing controlling stakes in its Italian life and non-life insurance businesses. The project would create Italy’s third-largest banking group, built around Banco BPM, with the combined entity remaining listed in Milan and serving about 6.5 million customers through more than 2,300 branches. Crédit Agricole would hold approximately 45% of the enlarged group, while Banco BPM’s current chief executive would remain in charge, and the governance structure would preserve operational autonomy and a board majority of independent directors.

The financial terms outlined by Crédit Agricole include an exchange ratio that values Banco BPM at a 20% premium, based on expected 2027 price-to-earnings multiples, and a €1 billion extraordinary dividend to be paid to existing Banco BPM shareholders before completion. Crédit Agricole estimates annual pretax synergies of around €800 million from the combination and projects that Banco BPM’s earnings per share would rise by about 24% in 2027 as a result of the deal. Banco BPM has said any proposal submitted to its investors must adequately reflect the strengths of its business model and fairly compensate for Crédit Agricole’s effective control.

The proposed merger structure requires several layers of investor and regulatory approval. In Italy, the transaction must pass the “whitewash” procedure so that Crédit Agricole can lift its stake in the combined group above the mandatory takeover threshold without launching a full buyout offer for Banco BPM. The combination is also subject to approval by Banco BPM’s extraordinary shareholders’ meeting, authorization from the European Central Bank and clearance under Italy’s golden-power regime.

Crédit Agricole has described itself as moving forward with satisfaction and determination following Banco BPM’s decision to open talks, while Banco BPM’s leadership has emphasized that minority shareholders must be adequately protected and receive equal treatment. The parties envisage that, if all conditions are met and approvals obtained, completion of the merger could take place in the second half of 2027. Until then, negotiations, shareholder engagement and regulatory reviews remain the central milestones that will determine whether this cross-border banking project proceeds to closing.