Italy's biggest bank reportedly wants to merge with France's Societe Generale to create a $2.5 trillion European giant

  • CEO of UniCredit reportedly keen to begin merger talks with French giant Societe Generale.
  • No discussions have yet been held about merging Italy’s biggest lender with France’s 3rd largest.
  • Societe Generale denies “any board discussion regarding a potential merger with UniCredit.”
  • Consolidations in the banking sector are increasing, with Barclays having reportedly held talks about merging with Standard Chartered.

Two of continental Europe’s biggest banking brands could be set for a major merger, after the Financial Times reported that Italy’s UniCredit is seeking a deal with Societe Generale.

While no formal talks have been held yet, UniCredit is said to be keen on the merger. UniCredit CEO Jean-Pierre Mustier is spearheading the effort, the Financial Times reported on Sunday evening.

According to the FT report, which cites sources familiar with the plans, Mustier has been talking about the deal for several months.

UniCredit declined to comment on the FT’s report while saying the bank’s “Transform 2019” turnaround plan is based on “organic assumptions.” Societe Generale, however, denied “any board discussion regarding a potential merger with UniCredit” in a statement cited by Reuters.

Any merger between the two lenders would create a bank with combined total assets of over $US2.5 trillion. This would put the new bank in direct competition with HSBC to be Europe’s largest lender in terms of assets.

The rationale behind the proposals is that Mustier believes Societe Generale would be “an ideal partner for the Italian lender, buttressing its investment banking and eastern European operations,” the FT said.

Reports of possible combination talks between the two banks come at a time when numerous mergers between European banks have been proposed. Last week the Financial Times reported that Barclays has considered merging with Standard Chartered Bank.

Senior board members at Barclays reportedly considered a StanChart tie-up as one of various possible contingency plans to ward off an activist investor who has built a stake in the bank.

There are also frequent rumours that Deutsche Bank could look to merge with rival Commerzbank, combining the largest and second largest banks in Germany.

Separately, it was reported that Societe Generale has agreed the terms of a settlement with US and French authorities in relation to their involvement in the rigging of the LIBOR rate, and over a case related to the Libyan Investment Authority.

You can read the Financial Times’ full report on the possible merger here ($).

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