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Sanpaolo hired Citigroup for mergers advice

The Italian bank Sanpaolo is set to seek acquisitions within the countries banking sector, as it confirms that Citigroup has been appointed to advise on possible mergers with other Italian banks.

The Turin-based bank's director general Pietro Modiano confirmed on Wednesday that the US investment bank has been recruited to advise Sanpaolo board members on possible takeover targets amid a growing trend of mergers and acquisitions in the country's financial sector.

Foreign institutions including France's BNP Paribas and Dutch bank ABN Amro have both acquired Italian banks in recent months, and mergers between the remaining Italian banks is seen as a way to consolidate the industry.

However, Sanpaolo insist that their merger aspirations are not restricted to Italy.

"We are open to operations both in Italy or abroad," Mr Modiano said.

The renewed bank merger speculation caused share prices to rise in Italy, with Sanpaolo itself adding 0.37 per cent to its share price, up to €13.5 ($17) per share.