Crédit Agricole has proposed merging its Italian subsidiary with Banco BPM, a deal that would create Italy’s third-largest banking group and lift the French lender’s stake in the Milan-based bank to about 45%. Banco BPM shares rose roughly 10% in Milan on Monday after the proposal was made public, according to Reuters and other reports.
Under the plan, Banco BPM shareholders would receive a 20% valuation premium built into the exchange ratio, together with a €1 billion extraordinary dividend. The proposal has been submitted to Banco BPM’s board for evaluation, and the transaction could be completed in the second half of 2027, subject to approvals.
The move marks the latest chapter in a prolonged period of consolidation in Italian banking, a market where several large lenders have pursued deals over the past two years. It would also give Crédit Agricole, which already owns close to 30% of Banco BPM, a much stronger position in one of its most important markets outside France.
Key Takeaways
- Crédit Agricole has proposed merging Crédit Agricole Italia into Banco BPM to form Italy’s third-largest banking group.
- Banco BPM shareholders would receive a 20% valuation premium and a €1 billion extraordinary dividend.
- Crédit Agricole’s stake in Banco BPM would rise to about 45% from 29.6%.
- The French lender estimates annual pre-tax cost synergies of €800 million, with completion targeted for the second half of 2027.
Terms Favour Banco BPM Shareholders
The exchange ratio proposed by Crédit Agricole reflects a 20% premium on the valuation of Banco BPM, according to the terms reported by Reuters and Investing.com. On top of the shares they would retain in the enlarged group, existing Banco BPM investors would receive a one-off dividend of €1 billion.
Crédit Agricole estimates that the combination would generate around €800 million a year in pre-tax cost synergies once fully implemented. The enlarged bank would serve about 6.5 million customers through a network of roughly 2,300 branches, according to the reported details of the plan.
Banco BPM chief executive Giuseppe Castagna would lead the combined group, Reuters reported. Crédit Agricole has described the approach as friendly, and the plan would keep Banco BPM as the centre of the merged entity rather than absorbing it into the French group’s existing structure.
Stake Increase Reshapes Ownership Structure
The merger would raise Crédit Agricole’s holding in Banco BPM to about 45% from 29.6% at present. That would give the French bank a dominant position in the merged lender while leaving a substantial portion of the shares with other investors.
The deal would require approval from Banco BPM’s shareholders as well as regulators. Banco BPM’s board is now reviewing the proposal, and the bank had not publicly responded to the detailed terms at the time of the reports.
Banco BPM has been at the heart of Italian banking manoeuvres before. In 2025, UniCredit withdrew its $17 billion bid for Banco BPM amid regulatory uncertainty, leaving the lender independent but closely watched as a potential partner in further consolidation.
Italian Consolidation Gathers Fresh Momentum
The proposal adds to a wave of deal-making among European lenders, which have used strong profits from higher interest rates to pursue scale. European bank shares rose on Monday, with the merger plan and upbeat quarterly results from other lenders supporting the sector, according to Reuters.
Italian lenders have also faced political scrutiny over their earnings in recent months. In August, the deputy prime minister proposed a three-year levy on the country’s largest banks, highlighting the sensitivity of the sector’s profitability and of any changes in its ownership. For Crédit Agricole, the plan would combine its Italian retail network with Banco BPM’s franchise, which is concentrated in northern Italy.
Approvals Will Shape Final Outcome
Investors will now watch for Banco BPM’s formal response and for any reaction from Italian authorities, which have closely monitored previous bids in the sector. The structure of the shareholder vote and the views of Banco BPM’s other large investors are likely to be decisive.
Looking ahead, the proposal sets up a lengthy approval process that could run well into 2027. If it proceeds as planned, the combination would reshape the top tier of Italian banking, although the final terms and the timetable will depend on negotiations with Banco BPM’s board, shareholder support and regulatory clearance.
