In Milan on February 6, Monte dei Paschi CEO Luigi Lovaglio revealed that early meetings with investors about the unexpected takeover bid for Mediobanca had helped alleviate some of the market's concerns.
Monte dei Paschi, supported by the state, made a hostile all-share bid for Mediobanca, marking a significant move seven-and-a-half years after a state rescue operation that marked the end of a decade-long crisis.
Despite limited synergies and cost-cutting opportunities between the two businesses, Lovaglio is counting on unlocking 1.2 billion euros in tax benefits by gaining a controlling stake in Mediobanca.
The anticipated tax benefits would boost Monte dei Paschi's 2024 income by 506 million euros.
Lovaglio aims to increase the payout ratio to 100% after the merger, intending to use these funds to reward Mediobanca shareholders.
He noted, "Once we start discussing and explaining [to investors], we end the meeting with a positive feeling that the rationale has been understood and in several cases shared."
After a recent meeting with investors in London, Lovaglio indicated that more clarification about the deal was necessary.
Monte dei Paschi reported a smaller-than-expected 5% decline in quarterly net income due to higher loan loss provisions and reduced trading income.
The bank's net profit for the year stood at 385 million euros ($400 million), a significant decrease from the previous year, which included a one-off release of funds reserved for legal risks totaling nearly 470 million euros.
Favorable legal outcomes have been instrumental for Monte dei Paschi, which has faced legal challenges in recent years.
In a bid to counteract the impact of lower interest rates, the bank experienced a 5% increase in net fees quarter-on-quarter, compensating for the decline in net interest margins.
For the full year, Monte dei Paschi's net profit reached 1.95 billion euros, surpassing the expected consensus forecast of 1.82 billion euros.
With no branch network, Mediobanca generates revenue from consumer credit, partnerships with MPS, investments in Generali, as well as its wealth management and corporate investment banking divisions.
Monte dei Paschi managed to grow its consumer loans by 21% in 2024 and saw a 40% increase in wealth management inflows.
The bid for Mediobanca by Monte dei Paschi followed a recent stake sale by the Treasury, reducing its ownership in Monte dei Paschi to 11.7%, while attracting two prominent Mediobanca investors as new shareholders.