ROME, October 15 (Reuters) – Italy’s Treasury is considering extending for six months the tax breaks for mergers of companies it first introduced to attract a buyer for ailing state-owned bank Monte dei Paschi di Siena ( MPS) (BMPS.MI), two sources close to the case said.
The program applies to all companies, but it mainly benefits banks and is a key part of an incentive program that the Treasury has introduced to sell MPS to its more powerful rival UniCredit (CRDI.MI).
The extension would give UniCredit more time to approve the purchase of “selected parts” of MPS which it has been discussing with the Treasury since early August.
In their current form, the tax advantages introduced by Rome with the 2021 budget allow banks to pay a commission to turn into tax credits known as deferred tax assets (CDI) resulting from past losses in the event of merger operations. approved by directors or shareholders by December 31, 2021.
The Treasury is now considering extending that deadline until June 30, 2022, the sources said.
UniCredit and MPS are still negotiating the terms of their agreement. While a preliminary agreement is expected in the coming weeks, according to several people familiar with the negotiations, the formal approval that unlocks the incentives would take more time.
UniCredit and MPS both declined to comment.
The Italian tax agency clarified in September that the program could be used for several separate merger deals, which bankers said potentially opened the door for three-way mergers if the incentives were extended.
The Treasury is currently considering leaving the incentive cap set at 2% of the assets of the smallest bank involved in the merger unchanged, the sources said.
Earlier this year, the Treasury tried to push through measures to expand incentives and raise the cap to 3%, but a political setback forced it to put the changes on hold, which would have been very costly.
Sources said at the time that the ministry may revisit the cap and timing of the incentives at a later stage.
The ploy has met with resistance within Prime Minister Mario Draghi’s coalition, where many politicians oppose the use of taxpayer money to stimulate bank mergers and could still try to block pressure from the Treasury to lengthen incentives.
In its current formulation, the program involves a boost of 2.2 billion euros ($ 2.6 billion) for a buyer of MPS.
Analysts see incentives as a key consolidation driver for the Italian market, where midsize lenders like Banco BPM (BAMI.MI) and BPER Banca (EMII.MI) are under pressure to seek a merger after Intesa Sanpaolo (ISP . MI) snatched up healthiest second-tier actor UBI last year to solidify his national leadership.
CrÃ©dit Agricole de France (CAGR.PA) took over the regional bank Creval at the start of the year, benefiting from the profit-sharing program.
($ 1 = 0.8614 euros)
Report by Giuseppe Fonte in Rome and Valentina Za in Milan; Editing by Jan Harvey
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