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There areMPSMPSMPSMPSMPS BPMBPMEU MPS MPS MPSMPS MPSMPS Your browser does not support the element. various ways to look at the unexpected €13.3bn ($13.9bn) bid that Monte dei Paschi di Siena () made for Mediobanca on January 24th. At first glance, it testifies to a remarkable recovery by , the world’s oldest bank, which was bailed out by the Italian state in 2017 at a cost of €5.4bn. And if ’s attempted purchase of Italy’s pivotal investment bank is accepted, the deal would lead to welcome consolidation in Italy’s fragmented banking industry. But there is also another way to look at the bid. In a country where politics and money overlap to an unusual degree, it is perhaps the most useful. Consider what the deal would mean for Giorgia Meloni, Italy’s prime minister.In short, it might extend the influence of her right-wing coalition over not one but two of Italy’s most important financial institutions. ’s offer is the government’s second attempt to create a rival to the “big two” of Italian banking: Intesa Sanpaolo and UniCredit. In November ministers prepared the ground for a union between and Banco , another commercial lender, which was derailed when UniCredit made its own offer for Banco .To comply with rules, the Italian state has shed most of its interest in since the bail-out. Yet it remains the biggest shareholder with almost 12% of the total equity. Moreover, part of what it offloaded has been bought by two investors who have repeatedly been on its side in boardroom battles: Francesco Milleri, who manages Delfin, an investment fund for the family of Leonardo Del Vecchio, a late eyewear magnate; and Francesco Gaetano Caltagirone, an octogenarian building and media tycoon who is seen as close to Ms Meloni, a fellow Roman. Both also have stakes in Mediobanca, with Delfin the bank’s largest shareholder. Neither Mr Caltagirone nor Mr Milleri is a fan of Alberto Nagel, the bank’s boss.Analysts at Barclays, a British bank, estimate that, if the bid succeeds, the treasury and the government’s allies would own more than 26% of the new entity—quite enough for control. But will it succeed? Investors in Mediobanca are being offered 23 new shares in for every ten they hold in the target bank. Even before a slide in ’s share price following disclosure of its bid, that represented a frugal premium of 5%. Mediobanca calculates that by January 27th it had become a 3% discount.In a defiant note, the target bank’s directors rejected the offer as “strongly destructive of value”. argues that absorbing Mediobanca would release €700m a year of savings, representing what Luigi Lovaglio, ’s chief executive, describes as “an incredible strategic opportunity”. Analysts are unconvinced. They worry that any gains could be offset by the culture clash which would arise from merging an investment bank with a retail lender.Some have also asked whether the true aim of the operation is influence over Generali, Italy’s biggest insurer, in which Mediobanca is the largest investor. There, too, Delfin and Mr Caltagirone already have sizeable stakes and are once again united in criticism of the management. The government is another critic: it has objected to Generali’s plan to join forces with Natixis, a French investment-management firm, fearing it could lead to Italian savings being allocated by foreign financiers.A takeover of Mediobanca by would, therefore, extend a skein of crossholdings that is starting to look like one that formerly concentrated power in a tiny circle of Milan-based powerbrokers. It was undone by Mario Monti in 2012. Mr Monti, who lasted just two years as prime minister, believed in free markets. In contrast, Ms Meloni is the leader of a nationalist party with protectionist instincts.
