Advisers for Banca Monte dei Paschi di Siena SpA and Banco BPM SpA are exploring a potential merger of equals. This deal would be structured as a combination of shares and cash, offering an alternative to Intesa Sanpaolo SpA’s €35 billion bid for Monte Paschi.

Details remain fluid, but the discussions suggest a strategic move by Monte Paschi and Banco BPM to create a combined entity that could be more competitive. The cash component in the proposed deal is a significant element, differentiating it from a pure stock swap.

This potential transaction comes as the Italian banking landscape is undergoing consolidation. Intesa Sanpaolo’s substantial offer for Monte Paschi has been a major development, prompting other players to consider their strategic options. The outcome of these talks could reshape the Italian banking sector.