Monte dei Paschi's €34bn defence reshapes Italian banking

The board of Banca Monte dei Paschi di Siena, the world's oldest bank founded in 1472, emerged from a seven-hour session on August 20 with an extraordinary defensive manoeuvre, according to an analysis by Lucrezia Reichlin published by Project Syndicate. Facing a €30.6 billion ($35.7 billion) takeover bid from Intesa Sanpaolo, the Siena-based lender launched share-exchange offers for Banco BPM and Banca Generali totalling roughly €34 billion, while also distributing €4 billion to its own shareholders.

The counter-offensives, which came after Monte dei Paschi was rescued by Italian taxpayers in 2017, signal a dramatic escalation in the consolidation of Italy's banking sector. Reichlin, a prominent economist, argues the episode reveals a fundamental tension at the heart of European financial integration: policymakers have focused on making governments surrender influence over national banking systems, but have paid too little attention to building a genuine European financing channel.