Banco di Roma takeover set to create country’s biggest bank

ITALY’S second biggest saving bank, the Cassa di Risparmio di Roma, is negotiating to take over Banco di Roma, one of the three state-owned “bank of national interest”, in a deal which would create the country’s biggest bank.
Talks have reached an advanced stage. The transaction, which may be announced by the end of this month, will represent the biggest leap to date in the rationalization of the Italian banking sector.
It would also mark a step in the partial privatisation of Italy’s banking sector. IRI, the state holding company which currently owns 61 per cent of Banco di Roma, is expected only to take a minority stake in the new venture, although the majority of its shares would still be publicly-owned.
The merged banks will create a powerful force in central Italy, where they are likely to hold immense influence over the local deposit market. Cassa di Risparmio di Roma is already planning to buy out the remaining 49 per cent stake in Banco di Santo Spirito, another regional bank in central Italy, which it does not already own.
Observers say support for the Rome Cassa, which will subsequently trade under the Banca di Santo Spirito name, to take over Banco di Roma, is running very high. Initial polical indication are believed to be favourable, while the Bank of Italy has given strong support. However, reaction at Banco di Roma, the weakest of the three “bank of national interest”, may be less warm.
As matters stand, Cassa di Risparmio di Roma is Italy’s 13th biggest bank, with $25.4bn in total assets, while Banco di Santo Spirito ranks 17th, with assets of $20.6bn. Buying Banco di Roma  would put the combined institutions just ahead of Istituto Bancario San Paolo di Torino, which is currently Italy biggest Bank. It is not yet clear what effect the transaction would have on Banco Hispano Americano and Commerzbank, the Spanish and German partner banks of Banco di Roma, which have long been nursing ambitions of buying into its capital.
A three-way link between the Rome Cassa, Santo Spirito and Banco di Roma has been criticised  on the grounds that the resulting institution will have too dominant a position in central Italy and inadequate representation elsewhere.
However, supporters of the deal argue that a “super-regional” bank will be able to maximise profitability though its away over the local deposit marker, while the inclusion of Banco di Roma will add an element of international coverage which the two other banks lack.
In any event, the new bank, which will probably not be created until well into next year at the earliest, will require a hefty rationalization period to avoid flagrant duplication of branches.
However, the new bank is not expected to allow much room for encroachment by outsiders. It may even maintain some element of duplication by keeping alive both names and possibly trading under two distinct brands.

By Halg Simonlan in Milan