Italy's Financial Power Struggle: Mediobanca, MPS, and the Battle for Banca Generali

In August 2025, Italy's banking sector is gripped by a high-stakes corporate governance battle that could redefine the country's financial landscape. At the center of the conflict is Mediobanca's €6.3 billion defensive bid for Banca Generali, a move designed to thwart a hostile takeover by Monte dei Paschi di Siena (MPS) and consolidate Mediobanca's dominance in wealth management. This struggle is not merely a corporate maneuver but a test of strategic governance, shareholder alignment, and the resilience of Italy's banking system in an era of consolidation.

The Strategic Rationale: Mediobanca's Defensive Play

Mediobanca's acquisition of Banca Generali is framed as a strategic necessity. By combining with Banca Generali, Mediobanca aims to create Italy's second-largest wealth management entity, with €215 billion in total funds under administration (TFAs) and a network of 3,750 professionals. The deal is structured to avoid balance sheet dilution, using Mediobanca's 13% stake in Assicurazioni Generali as payment. This approach aligns with the bank's “One Brand One Culture” vision, emphasizing a capital-generative business model with low sensitivity to interest rates and credit risk.

The timing is critical. Regulatory approvals are expected by August 18, just 19 days before MPS's takeover bid expires on September 8. This narrow window gives Mediobanca a strategic edge, as a successful August 21 shareholder vote would lock in the deal before MPS can finalize its hostile offer. Proxy advisors Glass Lewis and Institutional Shareholder Services (ISS) have endorsed the bid, citing its alignment with long-term value creation.

Key Stakeholders: Caltagirone and Milleri's Influence

The battle is not just about strategy but also about power. Francesco Gaetano Caltagirone, a major Mediobanca shareholder with cross-holdings in MPS and Generali, has emerged as a vocal critic of the Banca Generali deal. Caltagirone argues the transaction lacks industrial logic and transparency, warning that it grants Mediobanca's board a “blank check” without sufficient oversight. His 7.66% stake in Mediobanca, combined with his influence over Generali and MPS, positions him as a pivotal player in the governance conflict.

Francesco Milleri, chairman of Delfin (the Del Vecchio family's holding company), holds a 19.8% stake in Mediobanca and a 9.866% stake in MPS. Delfin's stance is nuanced: while it supports Mediobanca's industrial strategy, it remains open to evaluating MPS's offer, which Milleri has called “very interesting.” Delfin's potential alignment with either side could tip the balance in the August 21 vote.

Governance Tensions and Shareholder Alignment

The governance debate has exposed deep fractures among Mediobanca's shareholders. Caltagirone and Delfin initially opposed the June 2025 shareholder vote, citing insufficient information on the Banca Generali bid. Their demands for a revised prospectus and clearer terms forced Mediobanca to delay the vote until August 21. This delay, however, has not resolved the underlying tensions.

Mediobanca CEO Alberto Nagel has defended the bid as a necessary step to counter MPS's “destructive” takeover attempt. He argues that the merged entity will generate €1.5 billion in net profit, with 50% from wealth management, 20% from corporate and investment banking, and 30% from corporate finance. The board has also emphasized the lack of industrial rationale in MPS's offer, which it deems “financially and strategically inadequate.”

Regulatory and Market Implications

The European Commission's decision not to investigate the deal for foreign subsidies and the Italian competition authority's unconditional approval have reduced regulatory friction. However, the ECB's upcoming capital adequacy test for MPS in July–August 2025 remains a wildcard. If MPS fails to maintain its 18.3% CET1 ratio, it may be forced to raise capital, weakening its takeover bid.

For investors, the outcome of the August 21 vote is a high-probability catalyst. A successful vote would accelerate Mediobanca's transformation into a leading wealth manager, with projected annual cost savings of €700 million by 2027. Conversely, a rejection could embolden MPS, triggering a liquidity crunch for Mediobanca and reshaping Italy's banking hierarchy.

Investment Thesis and Strategic Outlook

The Mediobanca-Banca Generali merger represents a compelling case study in strategic governance and shareholder alignment. For long-term investors, the deal's success hinges on three factors:
1. Shareholder Support: The August 21 vote will determine whether Mediobanca can secure the 50%+1 threshold. Proxy advisors' backing and Delfin's potential alignment are critical.
2. Regulatory Clarity: The ECB's capital test for MPS and the European Commission's state aid investigation will shape the competitive landscape.
3. Execution Risk: Post-merger integration, including the expansion of distribution agreements with Generali, will dictate the deal's value realization.

Investors should also monitor the broader Italian wealth management market, projected to grow at 4.5% annually through 2030. A successful Mediobanca-Banca Generali merger could capture a 15% market share, positioning it as a European leader.

Conclusion: A High-Stakes Reckoning

The battle for Mediobanca is more than a corporate takeover—it is a test of governance principles in a consolidating industry. For investors, the outcome will determine whether Italy's wealth management sector remains a fragmented landscape or evolves into a consolidated powerhouse. While risks persist, the strategic logic of Mediobanca's bid, supported by governance advisors and regulatory clarity, tilts the odds in its favor. Those with a medium-term horizon may find value in Mediobanca's shares ahead of the August 21 vote, provided they hedge against potential regulatory or governance shocks.

In the end, this struggle underscores a broader truth: in banking, as in chess, the boardroom is the battlefield, and the players who master the rules of governance often emerge victorious.