Crédit Agricole has proposed a friendly merger of its Italian subsidiary, Crédit Agricole Italia, with Banco BPM, a move that would lift its stake in the Milan- and Verona-based bank from nearly 30% to 45% and aim to create Italy’s third-largest banking group, behind Intesa Sanpaolo and UniCredit.

The offer gives Banco BPM shareholders a 20% premium to the bank’s valuation and includes a €1 billion special dividend.

Crédit Agricole expects the merger to generate €800 million in annual pre-tax synergies once fully achieved.

The combined bank would have 6.5 million customers and more than 2,300 branches in Italy, remain headquartered and listed in Milan, and be led by Banco BPM CEO Giuseppe Castagna, with a majority-independent board.

Crédit Agricole estimates the deal would increase Banco BPM’s 2027 earnings per share by about 24% and could close in the second half of 2027, subject to approvals.

The transaction requires approval from Banco BPM shareholders at an extraordinary meeting, including a two-thirds vote of the capital represented and a “whitewash” exemption from a mandatory takeover offer, as well as regulatory approval including from the European Central Bank and approval from the Italian government.

That uncertainty follows Meloni’s opposition to a proposed partnership between France’s BPCE and Italy’s Generali; the companies abandoned the plans on December 11, 2025, after government resistance.

Banco BPM was previously targeted by Banca Monte dei Paschi (MPS), whose shareholders rejected a bid strategy to counter Intesa’s takeover at an extraordinary meeting in late October.

Crédit Agricole is presenting the deal as an entirely Italian combination, seeking to ease Giorgia Meloni’s government’s concerns about foreign banks expanding in Italy ahead of the 2027 general election.

Economy Minister Giancarlo Giorgetti has so far declined to comment, saying in response to earlier rumors that the government cares about banks’ ability to collect, protect and lend savings, rather than the nationality of their owners.

Rome’s concern is partly tied to Banco BPM’s asset manager, Anima, which holds substantial Italian government bonds; Crédit Agricole controls Amundi, Europe’s largest fund manager, and the government fears foreign fund managers could steer Italian savers’ money away from domestic bonds.

The government of Prime Minister Giorgia Meloni can intervene in mergers it deems strategically important, and its response to this proposal remains uncertain.