August 26, 2006	Saturday	Sha'aban 1, 1427

ROME, Aug 25: Boards of directors at Italian banks Banca Intesa and San Paolo IMI were expected to approve a merger of the two lenders at separate meetings on Saturday in a move that presages further consolidation in the fractured national banking sector.

The banks said that their directors on Saturday would consider the possibilities of a tie-up, but the Italian press is already hailing the expected creation of “superbank” having the stature of a “European colossus.”

The combined entity would rank just behind UniCredit in Italy and, with market capitalization of 63.8 billion euros ($81 billion), would occupy seventh place among European banks.

The economic newspaper Sole-24 Ore has said an agreement between the two banks would call for “a merger of equals” under dual management. Banca Intesa is Italy's second largest in terms of branches and staff, while San Paolo is the country's third leading lender.

Headquartered in Milan, the new bank would have 6,200 branches and 13m clients in Italy, with 315bn euros in direct receipts and assets worth 510bn euros.

Press comment here foresees the merger as signalling a sweeping consolidation drive in the sector, notably as central bank head Mario Draghi has adopted measures making it easier for such alliances to take place.

Following his appointment in January, replacing Antonio Fazio, Draghi abolished a requirement that merger projects be approved by a surveillance authority before being examined by boards of directors.—AFP