Monte dei Paschi's defence signals shift in EU banking

In a dramatic defence against a takeover attempt, Banca Monte dei Paschi di Siena has launched share-exchange offers for two other Italian banks, Banco BPM and Banca Generali, totalling roughly €34 billion. The move, reported by Project Syndicate, came after the bank's board deliberated for seven hours on August 20.

The world's oldest bank, founded in 1472 and rescued by Italian taxpayers in 2017, was responding to a €30.6 billion takeover bid from Intesa Sanpaolo. In addition to the counter-bids, Monte dei Paschi also distributed €4 billion to its own shareholders.

Writing for Project Syndicate, economist Lucrezia Reichlin argues the episode reveals why EU policymakers should focus less on making governments surrender influence over national banking systems and more on building a European financing channel. The battle, she contends, shows the limits of the current approach to financial integration.