ROME/MILAN, Jan 27 (Reuters) - Monte dei Paschi (MPS) shares continued their decline on Monday, following losses from Friday, indicating ongoing investor skepticism about the Tuscan bank's attempted acquisition of larger competitor Mediobanca.
Last Friday, the state-supported bank initiated an all-share bid valued at $13.9 billion for Mediobanca, prompting the latter's board to commence evaluating the proposal.
In accordance with Italian takeover regulations, the board will only be able to formulate an official opinion and offer guidance to shareholders once the bid's prospectus is publicly available, expected in a few months.
In a communication to employees over the weekend, Mediobanca CEO Alberto Nagel clarified that the bid was unsolicited, and the bank would prioritize safeguarding the interests of its stakeholders.
MPS shares, which were bailed out in 2017, tumbled by 1.5% by 0832 GMT, following a 7% drop on Friday.
Mediobanca's shares remained relatively stable after surging by 7.7% on Friday, while Italy's banking index decreased by 0.5%.
The proposed acquisition by MPS, amidst a trend of consolidation in Italy's banking sector, has raised concerns among analysts regarding potential cost-saving limitations and the retention of Mediobanca's investment banking team.
MPS CEO Luigi Lovaglio, a veteran banker with decades of experience at UniCredit, emphasized the strategy of amalgamating MPS' branch network with Mediobanca's products, maintaining both brands, and electing to operate Mediobanca's investment banking segment autonomously.
Mediobanca's business scope encompasses wealth management and consumer finance, with existing collaborative ties in the latter segment with MPS.
The government, retaining an 11.7% stake in MPS, praised the bank's recovery, with Prime Minister Giorgia Meloni highlighting the potential creation of a significant banking entity post-merger to safeguard Italian savings.
Barclays cautioned on Monday about potential share price volatility due to the lack of clarity, and suggested that MPS could allocate more of its surplus cash.
The bid has received support from unions, as it does not entail extensive branch closures or substantial job reductions.
Scope Ratings acknowledged that MPS' aggressive bid for Mediobanca could reshape Italy's financial landscape but cautioned about the high implementation risks due to differing business models and challenges in achieving sustainable synergies.
($1 = 0.9551 euros)