Two Italian lenders to merge on to form Italy's third-biggest bank: media

Two Italian lenders, Banco Popolare and Banca Popolare di Milano (BPM), have agreed to merge on to form Italy's third-biggest bank, the local media reported on Thursday.

The proposed merger between Banco Popolare, based in Verona, and BPM, based in Milan, will create the third banking group behind UniCredit and Intesa Sanpaolo, Italy's leading economic newspaper Il Sole 24 ore wrote.

The new banking giant with around 170 billion euros (around 190 billion U.S. dollars) in assets will reportedly be concentrated largely in northern Italy, with a leading market share in Lombardy region and significant market shares in Emilia Romagna and Tuscany regions.

Il Sole 24 Ore defined the move as "an important step forward for the entire banking system and for the Italian economy."

The merger will be the first between two banks after a reform of the Italian government that forces cooperative banks to become joint stock companies, increasing their market value by stripping them of their former anti-takeover protections.

Sources quoted by ANSA news agency said the European Central Bank (ECB)'s banking oversight committee has issued "an informal green light" to the merger after modifications requested on capital action and the governance of the post-merger bank.

To obtain a formal green light the banks must reportedly present a business plan to be examined first by the ECB's Single Supervisory Mechanism (SSM) and later by the ECB's governing council, the ANSA sources said. Endit