- Becomes No. 1 investor, analysts expect eventual full takeover
- Says it did not seek clearance to go above 10%
- Banco BPM looking for merger partner
- UniCredit had readied bid for Banco BPM before the war
MILAN, April 8 (Reuters) - France's Credit Agricole has become the single largest investor in Banco BPM after buying a 9.2% stake, raising the prospect of a full takeover bid and sending shares in Italy's third-largest lender sharply higher.
The move increases the French group's exposure to its main foreign market, where it has been playing an active role in ongoing banking consolidation.
While Credit Agricole said it had not sought supervisory approval to go above 10%, analysts pointed to the gradual stakebuilding since 2018 that preceded its $1 billion takeover of regional Italian lender Credito Valtellinese (CreVal) in 2021.
"We believe this is the first step that will bring the French peer to get, sooner or later, the control of Banco BPM. We witnessed the same process for CreVal," Bestinver said.
Credit Agricole had no comment. Two people close to the transaction said the rationale for the deal was to develop business lines and not to gain retail footprint.
Banco BPM has long been searching for a merger partner, with CEO Giuseppe Castagna seen as keen for his bank not to be swallowed by a bigger rival.
Under Italian rules a full takeover of Banco BPM from Credit Agricole would need approval from Italy's government and political sources said the investment had irked Italy's League party, traditionally seen as close to Castagna.
A strong presence in Italy's wealthy Lombardy region had made Banco BPM an attractive target for heavyweight UniCredit, which had readied a takeover offer before the Ukraine war and is now busy dealing with its large Russian exposure, sources had told Reuters.
Banco BPM's 200 billion euros ($217 billion) in assets at end-2021 compare with Credit Agricole Italy's 116 billion euros.
The two lenders held tie-up talks in 2020 which led nowhere. Banco BPM also sought in vain to strike what was dubbed a "merger of equals" with rival BPER Banca.
After losing nearly a fifth of its value since the start of the conflict, Banco BPM has a market capitalisation of just over 4 billion euros, giving the Credit Agricole stake a value of around 380 million euros.
Shares in Banco BPM rose 13% by 1500 GMT. Credit Agricole lost 0.5%.
The French lender said the investment, carried out by buying shares on the market and through a transaction with a leading international bank, would not significantly impact its core capital ratio.
Already tied to Banco BPM by a long-standing consumer finance joint venture, Credit Agricole said the deal strengthened its "solid relationship" with Banco BPM and aimed to expand the scope of their strategic partnerships.
It also shows its appreciation of Banco BPM's "solid franchise", good financial prospects and "strong and performing management team", it said.
Credit Agricole's Italian business dates back to 2007. Ten years later it took over three small failing banks for 130 million euros, while in 2016 its asset manager Amundi bought Pioneer Investments from UniCredit for 3.6 billion euros.
With Amundi's distribution agreement with UniCredit expiring in 2026, analysts said Credit Agricole was moving to secure an alternative sales network.
Banco BPM owns 19.4% of Italian asset manager Anima, whose shares rose 8% on speculation it could also play a role in any tie-up.
Banco BPM said the stake purchase had not been previously agreed between the two banks.
"The quality and importance of the investor, as well as the appreciation it expressed for our bank ... represent a clear acknowledgement of the value and potential of Banco BPM," the Italian bank said.
($1 = 0.9202 euros)
Reporting by Valentina Za and Andrea Mandala in Milan; Additional reporting by Giuseppe Fonte in Rome; Editing by David Holmes and Emelia Sithole-Matarise