By Sudip Kar-Gupta
PARIS (Reuters) -French bank Credit Agricole said on Friday it was seeking approval from the European Central Bank to raise its stake in Italy’s Banco BPM, which has also had bid interest from UniCredit, to just over 20%.
Italy’s banking arena has recently witnessed sector consolidation, after years of record profits in the industry which has made many of the smaller banks attractive targets.
“The Board of Directors of Credit Agricole S.A. has approved filing an authorization request with the ECB to cross 20% in the share capital of Banco BPM S.p.A.,” said Credit Agricole.
Credit Agricole is the biggest individual shareholder in Banco BPM, which has a market capitalisation of around 15 billion euros ($17.5 billion) and is a key commercial partner for the French group in Italy.
Holding just over 20% of Banco BPM would put Credit Agricole in a position “to qualify (the holding) within the framework of ‘significant influence’ and to account it pursuant to the equity method, consistently with Credit Agricole’s position as long-term shareholder and industrial partner of Banco BPM,” it said.
The equity method provides a way to account for investments where the investor has a meaningful impact on a company’s financial performance, without having full control.
Credit Agricole partners in consumer finance and insurance with BPM.
Credit Agricole started to increase its stake in BPM after it became a takeover target for UniCredit, although UniCredit’s bid for BPM has been hampered by conditions laid out by the Italian government to authorise it.
The French bank currently holds 19.8% of Banco BPM.
Credit Agricole reiterated it did not plan to buy or exercise control of Banco BPM, and that it would continue to keep its stake in Banco BPM below the level at which a full takeover offer would become compulsory.
($1 = 0.8552 euros)
(Reporting by Sudip Kar-Gupta; Additional reporting by Valentina Za; Editing by Louise Heavens)
