Shareholder attempts to block Italian bank merger

13 October 2006

Spain's Banco Santander Central Hispano has attempted to block the planned merger between the two Italian banks Sanpaolo and Banca Intesa due to concerns over the deal's share swap ratio.

Santander, which is a key shareholder in Sanpaolo, claimed that the share swap was insufficient and has drafted in Deutsche Bank to give an independent judgment of the issue.

Despite this, executives from the two banks met in Rome yesterday to give their approval for the merger, which looks set to create one of Europe's top ten largest banks, worth an estimated €72 billion ($90.37 billion).

France's Credit Agricole, currently Banca Intesa's largest single shareholder, as agreed to the merger after initially refusing to give its consent, although it announced plans to reduce its 17.8 per cent stake to around 4.5 per cent.

The French bank will now buy Intesa branches, which will need to be sold as a result of the merger for antitrust reasons.

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