ROME, Jan 24 (Reuters) - Italy's government endorsed Banca Monte dei Paschi's (MPS) bid for merchant bank Mediobanca on Friday, highlighting the potential of the proposed deal to bolster the country's banking sector and overall economy.
Economy Minister Giancarlo Giorgetti, a member of the right-wing League party, described the move by the Tuscan lender, which was bailed out, as "completely transparent and in the best interests of the Italian economy."
After a year in which the Italian Treasury significantly reduced its stake in MPS, amounting to 13.3 billion euros ($13.97 billion), the bank is now positioned for a merger and acquisition deal and a re-entry into the private sector.
Giorgetti, speaking at a League party event in northern Italy, commended MPS's management team for their "outstanding performance" and indicated that the market's assessment of the proposed deal would be decisive.
Foreign Minister Antonio Tajani, leader of the more moderate Forza Italia party, echoed similar sentiments, emphasizing the importance of market-driven initiatives to fortify the already sound Italian banking system.
Sources familiar with the situation reported that Prime Minister Giorgia Meloni's government views the potential MPS-Mediobanca merger as a means to establish a robust banking entity without detrimental job cuts or branch closures.
MPS Chief Executive Luigi Lovaglio disclosed during an analyst call on Friday that the idea of such a merger was initially discussed with the economy ministry in late 2022, indicating government endorsement for the transaction.
Tajani stressed the necessity of completing the full privatization of MPS, noting that the government currently holds an 11.7% stake in the bank, down from the 68% acquired during the 2017 state rescue.
Giorgetti pledged a future "complete exit" from MPS, asserting that "the government should not act as a financial institution."
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