Italy’s Monte di Paschi di Siena (MPS), the world’s oldest bank, has proposed a bold three-way merger with Banco BPM and Banca Generali to remain independent amid takeover interest from larger rival Intesa Sanpaolo. The deal, if successful, would create Italy’s second-largest banking group by customer loans, with a combined market capitalisation of around €70bn. MPS argues the merger would generate €1.2bn in cost savings, with a present value of €8.4bn, and boost shareholder value.

The proposal includes a €4bn special dividend and positions MPS to own over 50% of the merged entity, valuing its stake at over €40bn—15% above its current market cap. However, the offers to Banco BPM and Banca Generali are modest, with BPM receiving no premium and Generali only a 10% markup. Analysts question the feasibility of managing such a complex four-way combination, especially after MPS recently acquired Mediobanca.

Italian politicians, including Prime Minister Giorgia Meloni, have expressed concern about MPS being broken up. The move appears to be a defensive tactic to deter Intesa’s advances, though it may backfire by signaling desperation to shareholders.