Banca Intesa and Sanpaolo IMI may give Credit Agricole about 600 bank branches as well as compensation for an early end to exclusivity deals to win approval for their merger, according to sources close to the matter.
The details of the merger may be approved at board meetings next week. Credit Agricole holds 18 percent of Intesa and would have about 9 percent of the merged bank, making its approval key for the $80 billion deal.
The two Italian banks may offer just over 140 of their combined branches, a financial source said on Thursday, to add to about 460 that Agricole might buy from Intesa.
Intesa has already said it is discussing the sale of its Cariparma unit, which has about 310 branches, to Credit Agricole, and financial sources have said a deal may also include FriulAdria, which has about 150 branches. "A total 600 is at the high end of Credit Agricole's expectations," one of the sources said.
Credit Agricole and Intesa declined to comment. The two Italian banks between them have just over 6,000 branches including Cariparma and FriulAdria - double those of closest rival UniCredit and likely to exceed limits set by competition authorities in some regions.
Cariparma's branches are largely in Italy's wealthy north and central regions, while FriulAdria focuses on the north-east around Trieste and Venice. The merged group will be the leader in most regions of Italy, with a market share of 19 percent in the north-east, nearly 14 percent in the centre and 23.6 percent in the rich north-west. Exane BNP Paribas analysts have valued Cariparma alone at a minimum of 2.8 billion euros ($3.6 billion).
A source close to the merger deal told Reuters in August that Intesa and Sanpaolo could see a capital gain of about 1.5 billion euros if they sold 300 branches, which implies a 3 billion euro gain for the 600 offered to Agricole.
The Intesa board will meet on October 12 to approve the merger, the source close to the matter said. Both banks are expected to hold board meetings by mid-October to approve detailed plans. An Intesa shareholder, Cariplo Foundation Chairman Giuseppe Guzzetti, said last month meetings would be called by October 15.
Any deal with Credit Agricole would also include a payment from Intesa for the French bank to release it from exclusive product distribution agreements in asset management, financial sources said, although details are still under negotiation.
Credit Agricole is not likely to accept an agreement on retail branches without a solution to this issue, and the talks on this could go to the last minute.
Such a deal would give Credit Agricole strong assets in Italy in addition to its joint venture in consumer financing with carmaker Fiat, which has some 48 billion euros of loans.
Intesa sold most of its asset management interests to Credit Agricole in May 2005 and at the time signed up to a 12-year agreement to distribute asset management products. Now the deal puts it into conflict with Sanpaolo IMI's valuable Eurizon wealth management unit, which the Turin-based bank had planned to list in what would have been one of the biggest public share offerings this year.
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