Italy's second-largest and third-largest banks, Banca Intesa and Sanpaolo IMI, agreed on Saturday to a merger which would see their new entity form the country's biggest bank and rank sixth in Europe.
In separate meetings, the boards of Milan-based Intesa and Sanpaolo IMI of Turin agreed to the merger, the banks said in a joint statement. The new bank will have 13 million customers and more than 6,000 outlets and will be based in Turin.
Intesa's president Giovanni Bazoli said the merger, "favorably received by all national and international commentators, offers a strong signal of vitality" of the Italian economy.
The merger would create a bank valued at more than 66 billion euros (US$84 billion), just ahead of the current Italian number one, UniCredit.
Under the deal, shares would be exchanged at a rate of 3.115 Intesa shares per Sanpaolo IMI share. The banks said they hope the merger will cause savings worth US$1.3 billion by 2009.
The deal will now have to be approved by the companies' shareholders before the end of the year, the sources added. A shareholders' meeting is planned for December, directors of both banks told journalists after the meeting.
Before that it will have to be submitted to competition authorities and the central bank. According to the Italian news agency ANSA contacts have already been made and should be formalized next week. The authorities have 60 days to give an opinion.
Some major shareholders have already backed the merger, including the French bank Credit Agricole which has an 18-percent stake in Intesa and a large share of voting power in a key group of Indesa shareholders.
The new bank would have 6,200 branches and 13 million clients in Italy, with assets worth 510 billion euros.
Press comment here foresees the merger as signalling a sweeping consolidation drive in the Italian banking sector.
Italian Prime Minister Romano Prodi has also given enthusiastic backing to the proposal, stressing that Italy needed "several strong banks" that could promote its interests on foreign markets.