Main goal in Italy bank M&A should be better credit, savings products, central bank says | The Mighty 790 KFGO

ROME (Reuters) -The Bank of Italy on Friday urged domestic lenders, which are facing an unprecedented wave of hostile takeover bids, not to lose sight of the main goal of merger deals: improving the offer of credit and savings products for customers.

Presenting the Bank of Italy’s annual report in Rome, Governor Fabio Panetta said consolidation efforts could bring Italy’s banking sector more into line with that of the other main European countries.

Italy is being rocked by a raft of bids which have pitted the country’s second-biggest bank UniCredit against the government.

The lender has challenged in court the conditions Rome has imposed to clear its proposed acquisition of smaller peer Banco BPM.

Bank mergers “must be well-designed and aimed solely at value creation,” Panetta said.

“Creating value means, first and foremost, offering firms and households adequate financing in terms of quantity and costs; effective and transparent savings instruments at fair conditions; qualified and innovative services consistent with Italy’s development needs,” Panetta said.

The Bank of Italy’s role is to make sure banks formed through deals are “sound in terms of capital, liquidity and risk governance,” he added.

“Other national and foreign authorities operate in accordance with their statutory powers,” Panetta said.

Italy’s government is a on a collision course with European Union authorities because it defends the right to have a say on bank deals — such as UniCredit’s bid for Banco BPM or an asset management tie-up between insurer Generali and French bank BPCE — on grounds of national security.

“Market dynamics and shareholder decisions” will ultimately determine the outcome of offers, Panetta said.

(Reporting by Valentina Za, editing by Gavin Jones)

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