BancaIntesa: the Italian Competition Authority is unhappy also with the new Crédit Agricole/Assicurazioni Generali new agreement

The saga regarding the divestiture of Crédit Agricole (CA) stake in Banca Intesa (see my previous post of 1 June 2009) is far from being over. To address the concerns raised by the Italian Competition Authority (ICA) on whether the merging parties complied with the condition imposed on the divestiture of branches to CA, CA and Assicurazione Generali (AG) have notified a new and downsized version of the shareholder agreement about the stake they have in BancaIntesa.
The new agreement comes immediately in force, replaces the older one and will be valid for a period of three years. The new agreement does not contain any clause for tacit renewal of the agreement as the old agreement did.
The new agreement sets the CA and AG commitments to prior consultation aimed at preserving and increasing the value of their stakes in Banca Intesa. Interestingly, the mechanism for prior consultation shaped by the new agreement is much slimmer than that of the old agreement. Under the old agreement, CA and AG examined the agenda of the meetings of the corporate bodies of BancaIntesa to verify whether they included matters of strategic relevance. They also could exchange documents, decide and adopt common positions on certain issues, and arrange how to exercise their voting rights in the general meeting of the shareholders. The new agreement only sets that the parties can adopt and implement a common position on given strategic matters. Also the members of the management and surveillance of Banca Intesa appointed by either CA or AG may take part to the implementation of the new agreement. The above directors may participate in the meetings between CA and AG and take into account the results of these meetings while exercising their powers. The new agreement has dropped the complex rules for the designation of members of the corporate bodies of BancaIntesa, which, instead, were included in the text of the old agreement.
Apparently, the parties concerned, above all CA, are caught in a catch 22 situation. On the one hand, CA has to qualify its stake in Banca Intesa as a strategic shareholding, or it will be required by the French financial market rules to devalue this stake. On the other hand, if the stake in Banca Intesa has the nature of a strategic shareholding, the ICA may believe that Banca Intesa and CA are not complying with the remedies imposed by the ICA by the conditional authorization of the merger. Indeed, despite the less involvement of GA and CA under the new agreement in the corporate governance matter of Banca Intesa the ICA fears that also the new agreement may enable CA to have a say on Banca Intesa governance. This come as small surprise if one considers the strict ICA approach to the competition assessment of links between banks in banking merger cases. Thus the ICA has decided to extend its investigation into the new agreement to ascertain whether its allegation are well-founded.
If you’re interested in the next installment of this story, stick around there’ll be news soon…

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