Italy's Monte dei Paschi ups 2026 profit goal on failed Mediobanca merger plan

By Valentina Za

MILAN, Nov 6 (Reuters) - Italy's third-largest bank, Monte dei Paschi di Siena (MPS) BMPS.MI, raised its full-year profit outlook on Friday after its shareholders sank a plan to buy the rest of rival Mediobanca and merge it into the group.

After acquiring 86% of Mediobanca last year, MPS in June became the target of a €34 billion ($38 billion) cash-and-share bid by bigger rival Intesa Sanpaolo ISP.MI. The plan entails a breakup of MPS' network to address competition issues.

Last week, MPS shareholders rejected the defence plan of MPS CEO Luigi Lovaglio after Intesa upped its offer and warned it would walk away, a move that won over the Tuscan bank's biggest investor, Italy's Del Vecchio family.

Without the Mediobanca integration costs, MPS forecast a full-year pre-tax profit above €3.7 billion, upping an earlier €3.6 billion forecast.

Intesa had said it would drop its bid if the defence plan passed, but it also asked MPS shareholders to pause the Mediobanca merger, which was voted down together with the defence strategy on October 29.

MPS said that dropping the merger added around €150 million to its 2026 pre-tax profit, but it will need to sell a senior bond of benchmark size by the end of the year for regulatory purposes without the merger.

Net profit in July-September rose to €543 million, above a €533 million company-provided analyst consensus forecast. At €2 billion, revenue also topped expectations.

Lovaglio told analysts higher deposit costs in the quarter reflected increased competition, a trend seen elsewhere in Europe.

Though it avoids offering above-market rates, Lovaglio said MPS was keen to keep a positive trend on retail deposits.

Earlier this week Intesa CEO Carlo Messina said his bank was neither facing tighter competition on deposits nor anticipated any in the quarters ahead.

($1 = 0.8930 euros)