By Valentina Za and Andrea Mandala
MILAN (Reuters) -A bid by Italy's third-largest bank Banco BPM to acquire full control of fund manager Anima Holding drove shares in both 9% higher on Thursday.
Shares in the Milanese bank hit their highest level since January 2016 after it said that it would launch a 1.6 billion euro ($1.7 billion) bid for the Anima shares it does not own.
Banco BPM will use its insurance business, which allows it to minimise the use of capital thanks to favourable rules known in the industry as 'Danish compromise'.
"A smart move on a smart company," Deutsche Bank (ETR:DBKGn) said in a note, adding the impact on capital and returns was also "smart".
The proposed deal, which will prop up Banco BPM's revenues in the face of declining interest rates, is the latest sign of pressure to consolidate in the savings management industry.
"Increasing the weight of the fee business in the group ... would make BPM's investment case even more solid," said analysts at Barclays (LON:BARC) of Banco BPM's move.
Banco BPM's main shareholder is French bank Credit Agricole (OTC:CRARY), whose asset manager Amundi had also taken a stake in Anima through funds managed on behalf of clients.
Barclays said the deal raised a question mark over Anima's ability to preserve its partnerships, in particular for the sale of products to retail clients.
This would be the case, for example, of Anima funds sold to customers in branches of Monte dei Paschi, which is 27% owned by the Italian state after a bailout in 2017.
Shares in Anima rose 9.8% to 6.3%, just above the 6.2 euros a share Banco BPM is offering other investors.
Bankers and analysts had predicted a swoop by BNP Paribas (OTC:BNPQY) to buy the asset manager of insurer AXA would encourage more banks to use their insurance arm to buy fund managers and take advantage of favourable capital rules.
Banco BPM is currently Anima's biggest shareholder with a 22.3% stake. Anima is 9.8% owned by Italian private equity fund FSI, which is already a partner of Banco BPM in payments.
FSI invested in Anima in February 2023, in a move that was interpreted as a bet on future M&A, while Poste Italiane owns another 12% and distributes Anima's funds.
Banco BPM CEO Giuseppe Castagna said on Wednesday that some other institutional investors would be welcome to remain as Anima shareholders.
($1 = 0.9290 euros)