Navigating Regulatory Crosscurrents: Mediolanum and MPS in the Wake of the Consob Probe

The recent Consob investigation into the November 2024 stake sale of Monte dei Paschi di Siena (MPS) has cast a long shadow over Italy's banking sector, exposing governance flaws and regulatory risks that could reshape the competitive dynamics of wealth management. For investors, the probe's implications extend beyond compliance concerns, touching on liquidity risk, capital reallocation, and the strategic positioning of two key players: Mediolanum and MPS.

Liquidity Risk: A Double-Edged Sword

Banca Mediolanum's liquidity metrics in 2025 paint a picture of resilience. Its liquidity coverage ratio (LCR) surged to 465% in Q1 2025, up from 387% in 2024, bolstered by deposit growth and disciplined capital management. This fortress-like liquidity position, coupled with a CET1 ratio of 22.5%, provides Mediolanum with flexibility to navigate regulatory scrutiny or pursue strategic opportunities. However, the bank's recent divestiture of a 3.5% stake in Mediobanca for €548.4 million—while framed as a de-risking move—raises questions about its exposure to governance entanglements.

For MPS, the stakes are higher. The bank's LCR of 169% and net stable funding ratio (NSFR) of 132% in Q2 2025 suggest a stable funding structure, but its reliance on ECB liquidity (6% as of June 2025) remains a vulnerability. The Consob probe into the controversial 15% stake sale—executed at a 5% premium and managed by Banca Akros, a subsidiary of Banco BPM—has already triggered EU-level scrutiny. If the European Commission deems the transaction non-compliant, MPS could face sanctions, forced restructuring, or even a reversal of the sale, which would dilute its capital base and jeopardize its €2.5 billion Mediobanca acquisition.

Strategic Asset Reallocation: A Race for Resilience

Both banks are recalibrating their asset portfolios to mitigate regulatory and market risks. Mediolanum has redirected proceeds from the Mediobanca stake sale toward its Grandi Patrimoni high-net-worth (HNW) platform, which saw €1.13 billion in April 2025 inflows. This shift underscores a broader trend in Italian wealth management: the pivot from banking conglomerates to specialized, fee-based services. By focusing on HNW clients, Mediolanum is insulating itself from the volatility of equity stakes and aligning with global trends in asset management.

MPS, meanwhile, has slashed its non-performing loan (NPL) stock by €500 million in H1 2025, reducing the gross NPL ratio to 3.7%. The bank's wealth management arm has also seen a 20% year-on-year surge in gross inflows, reaching €9 billion in the first half of 2025. This reallocation reflects a strategic bet on fee-based income to offset declining net interest margins—a move that could prove critical if the ECB's low-rate environment persists.

Regulatory Implications: A Test of Governance

The Consob probe is not merely a legal formality; it is a stress test for Italy's financial governance. The European Commission's focus on transparency, competition, and state-aid rules means that any irregularities in the MPS stake sale could trigger a cascade of penalties. For Mediolanum, the risk lies in indirect fallout: if the Mediobanca merger collapses due to regulatory hurdles, its HNW platform could lose a key institutional client base.

For MPS, the stakes are existential. A forced reversal of the stake sale would require the bank to refund €868.8 million (15% of its €5.792/share price) or resell shares at the current €6.90 price, diluting its capital. This would not only strain its balance sheet but also delay its Mediobanca acquisition, a transaction critical to its long-term growth.

Investment Advice: Hedging in a Fragmented Market

For investors, the path forward requires a nuanced approach. Mediolanum's strong liquidity and capital position make it a defensive play, particularly in a sector where regulatory uncertainty is the norm. Its focus on HNW clients and fee-based income offers a buffer against market volatility. However, the bank's exposure to Mediobanca's governance risks—should the merger unravel—warrants caution.

MPS, on the other hand, is a high-risk, high-reward proposition. While its robust CET1 ratio (19.6% as of Q2 2025) and strategic NPL reduction demonstrate resilience, the regulatory overhang remains a wildcard. Investors should monitor the EU's stance on the stake sale and consider hedging against potential capital dilution.

In the broader Italian banking sector, the probe underscores the need for consolidation. Mediolanum's ability to leverage its liquidity for strategic acquisitions or shareholder returns could position it as a consolidator in a fragmented market. For MPS, the outcome of the Mediobanca merger will be a litmus test for its ability to navigate regulatory and political crosscurrents.

As the Consob investigation unfolds, one thing is clear: liquidity and governance will be the twin pillars of survival in Italy's wealth management sector. Investors who prioritize these metrics—and remain agile in the face of regulatory shifts—will be best positioned to capitalize on the opportunities ahead.