By Andrea Mandala

MILAN (Reuters – Italy’s fifth largest bank BPER Banca agreed to purchase troubled rival Carige late Monday. This deal will bring an end to a seven year-old crisis at the regional lender.

BPER and Italy’s FITD depositor safety fund entered exclusive talks last month about Carige. The latter owns 80% of Carige since a rescue in 2019 that was funded by the sector.

BPER, which has roughly halved its capital injection request, said that Carige would be taken on at a token price of 1 euro, provided that FITD injects 530m euros ($599.8m), into Genoa’s lender in order to fund restructuring and clean-up expenses.

BPER is currently being advised by Mediobanca and Rothschild. It will then purchase the remaining Carige shareholders at 0.80 Euros per share.

Citi analysts stated in a note that the deal was a chance for BPER to consolidate its position and has a history of integrating and extracting potential synergies.

Carige, along with its bigger competitor Monte dei Paschi di Siena was one of the major banking problems that prevented Italy from finishing a restructuring. This began in 2015 and cost Italian lenders over 10 billion euro in rescue assistance.

Italian banks spent 600million euros on 2019 Carige rescue through FITD. KPMG worked together to sell its stake.

BPER moves forward with the Carige deal thanks to UnipolSAI’s leading shareholder. UnipolSAI is Italy’s second largest insurer and wants to establish a large distribution network for its products.

UnipolSAI pushed BPER to facilitate Intesa Sanpaolo’s (OTC) takeover of UBI Mid-tier Peer, BPER lastyear grew its assets by 40% and bought branches in order to protect itself from antitrust threats.

Carige will boost BPER’s assets further to approximately 155 billion euro, making it Italy’s fourth largest bank. This makes BPER an even more direct rival to Banco BPM which is the third and was a potential merger partner since the last collapse.

It is anticipated that the deal will close before June 30, according to BPER, FITD, and Carige in separate statements.

($1 = 0.8836 euros)