Mediobanca, Generali, and MPS: the ECB’s Role in Europe's Banking Battles

In recent months, the European banking landscape has experienced a wave of mergers and acquisitions, with profound implications for the financial sector. One of the most notable cases is the hostile takeover bid launched by Monte dei Paschi di Siena (MPS) against Mediobanca, aimed at securing control over the insurance giant Generali. In response, earlier this week Mediobanca reported two of its key shareholders, the Del Vecchio family and businessman Francesco Gaetano Caltagirone, to the European Central Bank (ECB) for potential unauthorized attempts to gain control over the three financial institutions. These shareholders hold significant stakes in all three companies, ranging between 5% and 20%, while Mediobanca’s strategic interest in Generali is underscored by the fact that it contributes nearly 40% of its annual profits (Financial Times). Meanwhile, the Institutional Shareholder Services (ISS) recommended that MPS shareholders vote against the capital increase meant to finance the acquisition, citing significant execution risks and describing the merger as “transformational and almost unprecedented” in the banking sector (Reuters).

The consolidation trend extends beyond Italy: Dutch banking giant ING has initiated preliminary discussions with Banca Popolare di Sondrio as part of its European expansion strategy, highlighting a broader cross-border ambition among financial institutions (Reuters). UniCredit further expanded its influence in Eastern Europe by completing the acquisition of a 90% stake in Alpha Bank Romania for €255 million in cash, along with a 9.9% stake in UniCredit Romania; the merger of these entities, expected in the second half of 2025, will create Romania’s third-largest banking group by assets (Reuters). In Germany, consolidation among cooperative banks continues, as evidenced by the merger between Volksbank Darmstadt-Südhessen and Mainzer Volksbank, which formed an entity with €14.4 billion in total assets. A similar consolidation is underway with the announced merger between Volksbanken Bielefeld-Gütersloh and Herford-Mindener Land, expected to create a bank operating 95 branches with over 1,200 employees (Quotidiano.net).

Amid this evolving landscape, the role of the ECB as a supervisory authority becomes increasingly critical. Indeed, while consolidation in banking can be beneficial by enhancing cost efficiency, promoting more focused and credible business models, and supporting greater risk diversification, it also increases the size and complexity of financial institutions, which in turn heightens systemic risks. Larger banks, involved in a wide array of activities, can become more challenging to manage and supervise, raising concerns about the potential for systemic instability if such institutions were to fail.

In this context, the ECB maintains a neutral stance, assessing each transaction purely on technical grounds without actively promoting or discouraging consolidation. Its involvement in mergers and acquisitions depends on the nature of the transaction. When a transaction involves the acquisition of a qualifying holding, typically representing 10% or more of a bank’s shares or voting rights, or the creation of a new bank that requires a fresh banking license, the ECB’s formal approval is required. In jurisdictions where national supervisors lack the authority to approve mergers, such as in Germany and Luxembourg, the ECB reviews the transaction as part of its ongoing supervision. Conversely, in countries like Italy, Greece, Slovenia, and Belgium, national supervisors are directly involved in approving mergers, while the ECB provides oversight to ensure that the new entity meets rigorous standards for profitability, solvency, liquidity, and governance. Even when a formal approval is not mandated, every transaction is subject to continuous review under the ECB’s broader supervisory mandate, which includes a detailed assessment of the business model, the credibility of business plans, and the potential execution risks associated with the merger or acquisition. Moreover, every qualifying holding is scrutinized, with assessments covering the reputation and financial soundness of the acquirer, the impact on the target bank’s stability, and risks related to money laundering or terrorist financing.

Regarding the attempted acquisition of Mediobanca by Monte dei Paschi di Siena (MPS), the European Central Bank (ECB) has not formally opposed the deal as of now. However, the ECB is closely monitoring the situation, especially concerning potential implications for investor coordination and the governance of the involved financial institutions. Furthermore, the European Commission has highlighted that, following the sale of the majority of the public stake in MPS, the bank is no longer bound by the commitment to refrain from acquisitions. Therefore, MPS is free to pursue corporate actions, including acquisitions, as it deems appropriate. Despite the absence of formal opposition from the ECB, concerns raised by Mediobanca regarding potential unauthorized control by certain MPS shareholders and the implications for the governance of Italian financial institutions may influence the future positions of the ECB and other regulators.

In conclusion, as the wave of mergers and acquisitions continues to reshape the European banking sector, the coming months will be crucial in determining the outcome of ongoing deals such as UniCredit’s bid for Banco BPM and MPS’s takeover attempt of Mediobanca. Investor resistance, regulatory scrutiny, and market dynamics will play a decisive role in shaping the final structure of these transactions. Meanwhile, cross-border expansion efforts underscore a broader trend of consolidation that extends beyond national boundaries. Against this backdrop, the ECB’s oversight will remain a key factor in balancing the potential benefits of banking integration with the systemic risks posed by ever-larger financial institutions. The evolving regulatory landscape and strategic maneuvering among Europe’s largest banks will likely define the next phase of financial sector consolidation in 2025 and beyond.