Italian banks. Machiavellian manoeuvres

A Dutch bid for an Italian bank looks likely to be thwarted

A BIG, strong international bank and a small, debt-laden local rival are vying to take over Banca Antoniana Popolare Veneta (Antonveneta), Italy's ninth-largest bank by assets. The big bank made its bid first; its price is higher; and it is offering cash, which the small bank is too stretched to do. No contest, you might think. This being Italy, however, Banca Popolare di Lodi (BPL), the country's tenth-largest bank, will probably prevail over the much bigger ABN Amro, of the Netherlands.

The Dutch looked well placed to pull off Italy's first significant cross-border bank merger. Antonveneta's board had approved the bid; the European Commission had given the green light; and Antonio Fazio, governor of the Bank of Italy, had given ABN Amro permission to increase its stake in Antonveneta above 20%.

Meanwhile, BPL was pulling every string to frustrate the Dutch. By last weekend it had upped its stake in Antonveneta from 4.9% when ABN Amro launched its bid to 29%, just below the trigger set by Italian law for a mandatory cash offer for the rest of the shares. At a shareholders' meeting on April 30th, BPL and a group of allies controlling 24.6% of the bank replaced Antonveneta's board with a new one friendly to BPL. ABN Amro had tried to prevent this by asking a regional court to suspend the central bank's authorisation of BPL's stake-building, but the court said no.

All of this happened with the tacit approval of the Bank of Italy, and maybe with its help. The Bank of Italy made the Dutch wait longer than BPL for permission to raise its stake above 20%. It has not seemed at all bothered by BPL's weaker finances. A letter leaked to La Repubblica, a daily newspaper, suggests that the Bank of Italy also encouraged BPL to form a concert party to win the takeover. “We only talk to the banks concerned,” said a spokesman for the central bank. Consob, the Italian market regulator, is investigating whether BPL and its allies acted in concert. Separately, prosecutors are reported to be looking into the financing of BPL's putsch.

Mr Fazio's defenders say that he is guarding the close ties between Italy's banks and small business, which has long benefited from loans subsidised from banks' retail profits. Antonveneta is the dominant lender to such firms in parts of northern Italy.

The central-bank governor looks much more relaxed about another foreign bid, by Spain's Banco Bilbao Vizcaya Argentaria (BBVA) for Banca Nazionale del Lavoro (BNL). Although BNL is bigger than Antonveneta, ranking sixth in Italy by assets, it is less involved with small business.

BBVA can expect opposition from a group of property entrepreneurs at a BNL shareholder meeting on May 21st. However, most analysts think that the Spanish have a good chance of success. They might secure this by promising to help their opponents get into Spain's booming property market and by offering a top title at BNL, maybe the chairmanship, to their leader, Francesco Caltagirone.

Mr Fazio could have avoided much of the recent fuss if he had allowed strong Italian banks to consolidate at home. Instead, he blocked planned mergers in 1999. Now Italy's big banks may look abroad for partners: comments by the boss of Germany's HVB have revived talk of a possible takeover by one of these, UniCredit. And foreigners will keep trying to enter Italy, whether Mr Fazio likes it or not.

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