The following correction was made on Monday May 21 2007
In the standfirst of this article we said the UniCredit/Capitalia deal was worth 100m. This should have said 100bn. It has now been corrected.
The pace of consolidation among Europe's banks accelerated yesterday when two Italian banks announced a €100bn (£68bn) marriage, catapulting themselves up the world rankings to become the second largest bank in Europe behind HSBC.
UniCredit is buying its smaller rival Capitalia for €22bn in a hastily arranged deal which is taking place at a time when the banking landscape across Europe is poised to change, largely as a result of Barclays' battle to take control of Dutch bank ABN Amro.
While Barclays has agreed a £45bn takeover of ABN Amro with a view to becoming the world's fifth largest bank, its ambitious deal has been stalled by a Royal Bank of Scotland-led consortium, which is trying to scupper the record-breaking transaction.
Barclays is today expected to try to regain the initiative in the world's biggest bank takeover by telling the stock market that it has filed for regulatory approval with the Financial Services Authority and the relevant authorities in the Netherlands.
The fight for control of ABN Amro was widely expected to set off consolidation across Europe, and that appeared to begin yesterday with the domestic Italian bank deal.
The transaction with UniCredit shields Capitalia from foreign bidders who are thought to have been circling Italy's third largest bank. ABN Amro owns 9% of Capitalia and will own almost 2% of the enlarged group following the deal with UniCredit, a bank which has itself grown rapidly through consolidation. Two years ago it bought HVB in Germany in what was then Europe's largest cross-border deal and helped make it one of the eurozone's biggest banks.
The transaction has been clinched in the last two weeks and will involve UniCredit offering 1.12 of its shares for each Capitalia share.
While both sides described the transaction as friendly, it has cost the job of Capitalia's chief executive, Matteo Arpe, who had been locked in a row over strategy with the chairman, Cesare Geronzi, who is remaining - for now - at what will be Italy's second biggest bank in terms of market share.
As the Italian banks announced their deal, Barclays was preparing to demonstrate its determination to prove that it is further advanced than any counter-offer by the RBS-led consortium for ABN Amro. Under Dutch rules, the consortium must update ABN Amro's investors about its intentions by May 27 after failing to persuade the board of the Dutch bank to recommend its £49bn cash and shares offer.
The attempt by the RBS consortium, which includes Spain's Santander and Dutch-Belgian group Fortis, to bid for ABN Amro has been made difficult by an agreement the Dutch bank has made with Bank of America to buy its US operation LaSalle.
LaSalle is the part of ABN Amro that RBS wants most and the Edinburgh-based bank is keen to pull off a side deal with Bank of America to try to carve up LaSalle and then proceed with a consortium bid for the rest of the Dutch bank, which has operations spanning Latin America and Asia.
It is by no means certain that Bank of America will help RBS in its ambition to acquire parts of LaSalle - such as its headquarters and operations in Michigan - or where this leaves the consortium which must find £35bn of cash to mount its offer for ABN Amro.
The consortium is being advised by investment bank Merrill Lynch but it is thought that JC Flowers, the private equity group set up by former Goldman Sachs banker Christopher Flowers, is also playing a role.
Takeover tally
£68bn The combined valuation of the two merged Italian banks
£15bn The value of Capitalia, the smaller of the two Italian banks
£45bn The amount that Barclays has agreed to pay for ABN Amro
£49bn The value of rival bid for ABN Amro from RBS-led consortium of 3 banks
