Italy looks like fertile ground for a mega merger deal in banking

European policymakers are anticipating a wave of mergers and acquisitions (M&A) in Italy’s banking sector. Antonio Reale, co-head of European banks at Bank of America, believes that something is likely to happen in the next 12 months. Reale pointed out that Banca Monte dei Paschi (BMPS) needs re-privatization, UniCredit has excess capital, and the Italian government has a new industrial agenda. UniCredit and BMPS are expected to play a role in the consolidation. However, analysts believe that there is a high bar for Italian banking M&A. The need for larger and more profitable banks in Europe is recognized, but skepticism remains about potential mega deals.