The Bank That Would Not Yield

The oldest bank in the world has decided it would rather attack than be absorbed. As Lucrezia Reichlin writes in Project Syndicate, the board of Banca Monte dei Paschi di Siena, founded in 1472 and rescued by Italian taxpayers in 2017, has answered Intesa Sanpaolo's €30.6 billion takeover bid with its own share-exchange offers for two other Italian banks, totalling roughly €34 billion. It is a manoeuvre of considerable audacity, and it deserves a moment of reflection.

Reichlin's argument is that this episode reveals the limits of the European Union's approach to financial integration. The policymakers in Brussels, she contends, have spent their energy trying to make governments surrender their influence over national banking systems. But the Monte dei Paschi counter-bid shows that the state's grip on its banks is not a vice to be pried open; it is a hand that will clench tighter when threatened.

We find this analysis persuasive, and we would extend it. The Italian state's attachment to Monte dei Paschi is not merely financial; it is symbolic. A bank that has survived centuries of plague, war and political upheaval carries a weight that no spreadsheet can capture. The world's press often frames such attachments as backward, a relic of a less modern age. But the bank's counter-bid suggests that the relic still has teeth.

Reichlin's prescription is for a European financing channel, a mechanism that would allow capital to flow across borders without the need for governments to surrender their national champions. It is an elegant idea, and we suspect it will remain one. The more likely future is a series of defensive skirmishes like this one, in which the oldest bank in the world reminds us that in finance, as in politics, the past is never quite as past as the present would like to believe.