Credit Agricole wants Banco BPM tie-up to scale up Italian business - sources

FILE PHOTO: A Credit Agricole logo is seen outside a bank office in Vertou near Nantes, France, February 11, 2019. REUTERS/Stephane Mahe/File Photo

LONDON/MILAN (Reuters) - Credit Agricole CAGR.PA is exploring a possible deal to buy Italy's third biggest bank, Banco BPM BAMI.MI as a way to scale up its presence in the euro zone's third biggest economy and take advantage of a consolidating landscape, sources said.

The French bank, led by Philippe Brassac, has set its sights on Banco BPM after discarding alternative options including small-sized lender Creval PCVI.MI, which was initially seen as a possible acquisition target, three sources said, speaking on condition of anonymity.

A representative for Credit Agricole said the two banks have had frequent exchanges over the years in relation to their partnership agreements in the consumer credit business.

When asked about a deal with Banco BPM, she referred to previous comments made by a Banco BPM spokeswoman denying media reports that the pair have held talks in relation to a possible merger. Banco BPM had no other immediate comment.

Credit Agricole, which operates in Italy through its Cariparma unit, holds consumer credit agreements with Banco BPM and wants a deeper tie-up to access the bank’s client network in the northern region of Lombardy, the sources said.

Discussions between the two banks have yet to kick off and Credit Agricole is in no rush to launch a bid as it wants to see how the Italian banking landscape will evolve following the sale of troubled lender Monte dei Paschi BMPS.MI, the sources said.

Banco BPM’s boss Giuseppe Castagna is seen as open to the prospect of a tie up with a bigger bank but would prefer a domestic merger to retain an influential role in the combined entity, one of the sources said.

Further changes in Italian banking are afoot as Rome, which spent 5.4 billion euros on a 68% stake in Monte dei Paschi in 2017, wants a new owner for the Tuscan lender.

Credit Agricole is closely monitoring a possible move by UniCredit CRDI.MI on Monte dei Paschi as this would remove a possible merger candidate for Banco BPM, giving France's second biggest lender a window of opportunity to make a formal approach, one of the sources said.

Reporting by Pamela Barbaglia in London and Valentina Za and Andrea Mandala in Milan; additional reporting by Maya Nikolaeva in Paris; Editing by Elaine Hardcastle and David Evans