Italy’s Biggest Bank Merger Since 2007

The approval of Italy’s biggest banking merger in almost a decade marks a first step in a process of consolidation urged by regulators, investors and Prime Minister Matteo Renzi. But plenty of obstacles remain to further deals among the country’s beleaguered lenders, Bloomberg reported. Politics, tougher capital standards and a mountain of bad debt on Italian banks’ balance sheets mean the combination of cooperative lenders Banco Popolare SC and Banca Popolare di Milano Scarl, approved by shareholders on Saturday, may be a one-off for now. Renzi has encouraged Italy’s weaker banks to combine to shore up their finances and pushed through measures to abolish restrictions on ownership and voting rights, two longstanding hurdles to mergers. Yet further progress may be slow as Banca Monte dei Paschi di Siena SpA, one of Italy’s largest lenders, fights for survival and Renzi’s own political future hangs on the outcome of a December referendum he called to overhaul Italy’s political system.