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Monte dei Paschi di Siena said the European Central Bank had approved its proposed takeover of larger rival Mediobanca.
The Italian lender said in a statement on Wednesday that the central bank had given the deal the go-ahead with no specific thresholds.
Some analysts and industry insiders had expected the regulator to set hurdles for take-up by shareholders that the deal had to clear for it to proceed because of cross shareholdings between investors in both Monte dei Paschi and Mediobanca.
The conditions set by the ECB include the provision of an integration plan within six months of the deal taking place, if the take up is higher than 50 per cent, with details of funding strategies as well as IT and cyber security risks.
Monte dei Paschi, whose single largest shareholder has been the Italian state since a 2017 bailout, launched a €13.3bn takeover of its larger rival in January that would shake up Italy’s banking sector.
Milanese lender Mediobanca rejected the approach as “contrary to its interests” and value destructive.
It had hoped to fend off the takeover by launching an offer to buy Banca Generali, the wealth management arm of the insurer.
However, a shareholder meeting to approve that deal earlier this month was postponed to after the summer, an indication that Mediobanca’s management lacked certainty that a majority of investors would back it.
Mediobanca’s market capitalisation has risen to about €16.8bn over the past six months.
MPS, which recently completed a turnaround under chief executive Luigi Lovaglio, is set to approve a capital increase to finance the Mediobanca acquisition this week.
Lovaglio has repeatedly said MPS is targeting uptake by 67 per cent of shareholders, but he has not ruled out going ahead with a lower threshold.
The deal’s cost synergies and certain tax benefits will not accrue if the acceptance rate is lower than 50 per cent and the two entities do not merge.
MPS will have to report to the ECB “de facto control” of Mediobanca if the offer is not ultimately backed by investors representing at least half of the share capital.
The takeover has been backed by top MPS shareholders including the billionaire Caltagirone and Del Vecchio families as well as the Italian government.
The Del Vecchio family holding, Delfin, is also the largest single shareholder in Mediobanca, followed by Caltagirone. Together they hold 27 per cent of the share capital.