they have developed a range of activities

Old more of 150 years, the Italian popular banks, in Europe only to be traded while relying on the "one man, one vote" principle, are probably on the eve of a new revolution. In 1993, under the impetus of a banking reform establishing a new universal Bank model, then essentially regional cooperatives to were already launched in a spectacular concentration: in 15 years, their number was divided by two to today without some 60...

At the same time, they have developed a range of activities, mergers and acquisitions, allowing them to occupy in total more than 20 of the Italian market, more than 25 even in 48 provinces of the country. According to a recent study by Merrill Lynch, they account for 24 of the Italy agencies, 22 of the loans, 19 of deposits and 19 of the assets.

Strengths: ancient, strong local implantation in the North (57 of their approximately 6,000 agencies), in the richest regions (Lombardy, Emilia-Romagna and Veneto), and a dominant also in the South (31 of market share).

The "perfect marriage".

Enjoying a good image and high fidelity on the part of their clients, they succeeded last decade to significantly increase their market share of (17 to 24 in number of agencies) and revenues (11 annual growth of credits on average), while retaining a margin significantly higher than that of other Italian banks, and large own funds.

Their weak points, according to Merrill Lynch, reside in a very protective governance embodied by the "one man, one vote" principle and reinforced by more or less binding legal obligations (thresholds of participation, voting rights, distribution of profits, etc.) which prevents any friendly OPA and any acquisition by exchanges of shares outside the cooperative sector. This very special governance they are also listed for the most important of them led to an accumulation of capital and a less managerial effectiveness study.

Overall, popular banks indeed display less productivity by about 20 of the largest Italian institutions (banking net product by agency and employee), and a coefficient of operation still above 60, Banca Popolare Verona Novara (BPVN) and Banche Popolari Unite (BPU).

"The relatively smaller size of popular banks does not benefit from economies of scale in business financing and investment as well as in computer science, notes the study. This creates a capital allowance which is not optimal and confirms the need for restructuring in the sector.

For Merrill Lynch, a merger between Banca Popolare di Milano (BPM) and Banca Popolare Italiana (BPI) would be the "ideal marriage between these two players, based on the potential of growth in income of BPI and the ability to reduce costs of BPM". According to the study, such a merger would identify synergies EUR 450 million before tax by 2008. It would also give rise to a group of 1,600 agencies spread across all the peninsula totalling about 5.3 of market share, with a presence particularly strong in the Northwest of the Italy and in Tuscany. Finally, their activities are complementary, BPM is particularly present in the management of assets and BPI in the consumer credit...