New progress has been made in the consolidation of Italy's banking sector. Banco BPM announced on Sunday that it will invite Banca Monte dei Paschi di Siena (MPS) to discuss a potential merger. If the deal proceeds, the merged banking group is expected to have a market capitalization of approximately €50 billion in Milan, surpassing UniCredit to become Italy's second-largest bank.

The combined market capitalization is approximately 50 billion euros.

Banco BPM stated that if the deal goes through, the merged entity will be structured with equal weighting for both parties. The bank did not disclose more specific transaction structures, but expects post-merger earnings per share to increase by more than 10%, primarily from pre-tax synergies exceeding €1.1 billion annually.

This means that after a wave of mergers and acquisitions last year, the Italian banking sector may be poised for a new round of consolidation. The market has previously speculated on the possibility of a merger between Banco BPM and MPS, and now that Banco BPM has formally extended an invitation for discussions, this idea has once again entered the substantive discussion stage.

UniCredit attempted to block the related transactions.

This potential deal also impacts the competitive landscape among Italy's major banks. UniCredit had previously attempted to block Banco BPM from becoming close with MPS.

In November 2024, the Italian government completed the re-privatization of MPS and introduced local investors as core shareholders, with Banco BPM also becoming an investor in MPS at that time. Market expectations of a merger between BPM and MPS prompted UniCredit to launch a takeover bid for Banco BPM.

However, the acquisition proposal ultimately failed in July 2025, which at one point limited Banco BPM's options for pursuing other mergers and acquisitions.

MPS has not yet issued a public response.

As of now, MPS has not immediately commented on Banco BPM's statement. According to sources close to the matter, the MPS board is scheduled to meet on Monday, which will be its first opportunity to formally discuss the issue.

Based on the information disclosed so far, Banco BPM has only explicitly expressed its willingness to push forward with negotiations and emphasized that both parties will have roughly equal weight in the new entity after the merger. Whether the transaction will move to a more advanced stage still depends on the attitude of the MPS board of directors and the progress of subsequent negotiations.