MILAN (Reuters) - Intesa Sanpaolo's (MI:ISP) surprise 4.86 billion euro (£4.05 billion) bid for smaller rival UBI Banca (MI:UBI), announced overnight, sent Italian bank stocks surging on Tuesday as it kicked off a long-awaited consolidation of the sector.
UBI Banca shares jumped 22% at the market open before trading was suspended, while Intesa shares rose 2%. The Italian banking stocks index was up 3.5% (FTIT8300).
Italy's top retail bank said late on Monday it would offer 1.7 newly issued shares for every UBI share tendered to create a European-sized player focused on wealth management and insurance, with more than 1.1 trillion euros in customers' financial assets.
"Our industry, at a European level, has entered a phase that requires greater scale, increased investment capacity and a focus on socially sustainable finance," Intesa Sanpaolo Chief Executive Carlo Messina said in a statement on Tuesday.
The planned takeover would see some 5,000 voluntary layoffs, which will be partly compensated by new hiring.
UBI, Italy's fifth-largest bank and the strongest among second-tier lenders, has so far made no comment on the offer, which came on the same day it announced plans to double net profits by cutting costs and shedding problem loans.
A source close to Intesa said the move had not been previously agreed but was not hostile.
If the offer is successful Intesa said it would quickly delist UBI and merge with it, aiming to complete the transaction by the end of the year.
To address potential antitrust concerns once the deal goes through, Intesa said it had signed on Monday a deal to sell 400-500 branches of the combined entity to BPER Banca (MI:EMII) and, possibly, some of UBI's insurance assets to UnipolSai (MI:US).
