Italy takes step towards possible bank M&A with Monte Paschi stake sale
Govt placed 15% of bailed-out MPS for 1.1 bln euros
Rival Banco BPM took 5%, fund manager Anima 3%
Banco BPM has bid to buy Anima - also an MPS partner
Italy spent 7 bln euros on MPS, has cashed in 2.7 bln
Adds JPM calculations on potential savings in paragraph 7; details in 9-10; sums spent and recovered by the state in 24
By Valentina Za and Giuseppe Fonte
MILAN, Nov 14 (Reuters) -Italy has begun to pave the way for a third big banking group in the country by selling a chunk of state-owned Monte dei Paschi di Siena (MPS) BMPS.MI to rival Banco BPM BAMI.MI and the fund manager partner of both lenders.
Shares in MPS jumped 12% in late morning trade on Thursday after the Italian government said on Wednesday it had raised 1.1 billion euros ($1.2 billion) by selling 15% of the Tuscan bank it rescued seven years ago to a group of Italian investors.
Banco BPM bought a 5% stake, and said it had no plansto seek European Central Bank approval to cross the 9.9% threshold, reiterating its standalone strategy.
An eventual tie-up with Banco BPM, however, is one of the possibilities for MPS, a senior government official told Reuters, a combination long favoured by the Treasury.
Conservative Prime Minister Giorgia Meloni and Economy Minister Giancarlo Giorgetti have repeatedly said the reprivatisation of MPS should help the emergence of a third large player alongside industry leaders Intesa Sanpaolo ISP.MI and UniCredit CRDI.MI.
Banco BPM has consistently denied any interest in a merger, and said it would boost earnings through MPS dividends, but analysts said it may eventually want to buttress profits through cost cuts. Shares in Banco BPM rose 2.3% by 1146 GMT.
JPMorgan calculated a merger could deliver around 550 million euros in cost savings, with a 14% return on the investment.
Italy's Treasury, which now owns just 11.7% of MPS, has repeatedly made the case for a merger to Banco BPM CEO Giuseppe Castagna, sources previously told Reuters.
Banco BPM has its roots in Lombardy, Italy's industrial heartland, and the home base of Giorgetti's League party.
A potential Banco BPM-MPS tie-up could lower the presence of Credit Agricole CAGR.PA in BPM's capital, of which it now holds 9.2%, making it the biggest investor.
"With lower interest rates ... we would not completely rule out a takeover of MPS by Banco BPM in a year's time," JPM said.
Banco BPM's move gives it an edge over BPER EMII.MI, another mid-sized Italian lender which was also seen as a potential MPS partner.
BPER's leading shareholder, insurer Unipol UNPI.MI, had said it could buy an MPS stake from the government if allowed to partner with MPS in insurance.
Banco BPM's investment also has implications for UniCredit CRDI.MI which is pursuing a potential deal with Commerzbank CBKG.DE but has met opposition in Germany.
Bankers had said Banco BPM, which UniCredit has looked to buy in the past, or even MPS could be a fall-back option if the German project failed.
STRONG DEMAND
Italy's Treasury sold twice the amount of MPS shares it had initially planned due to strong demand, at a premium of 5% to Wednesday's closing price of 5.52 euros a share.
That compares with the 2 euros a share at which MPS with great difficulty pulled off a make-or-break new share issue two years ago to raise money to finance thousands of voluntary early staff exits.
Under CEO Luigi Lovaglio, a veteran former UniCredit executive, MPS has restructured since then, and seen its profits boosted by higher rates like other Italian lenders.
To offset declining rates with higher fees, Banco BPM last week said it would spend 1.6 billion euros to buy out other investors in fund manager Anima Holding ANIM.MI.
Anima sells its funds partly through MPS branches under a contract that runs to 2030. On Wednesday Anima said it had bought 3% of MPS, raising its overall stake to 4%.
Delfin, the holding company of late billionaire Leonardo Del Vecchio, and Francesco Gaetano Caltagirone, who holds stakes in both Anima and BPM, each took a 3.5% stake in MPS.
Italy acquired 68% of MPS in the 2017 bailout, spending 5.4 billion euros. Including the 2022 cash call it has pumped a total of 7 billion euros into MPS, and pocketed 2.7 billion euros through three stake placements since last November.
($1 = 0.9483 euros)
Reporting by Valentina Za in Milan and Giuseppe Fonte in Rome; Editing by Susan Fenton and Philippa Fletcher
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