Italy’s government is open to selling its remaining stake in bailed-out bank Monte dei Paschi di Siena (MPS) but sees no immediate urgency, Prime Minister Giorgia Meloni announced on Friday. The remarks came during her annual New Year’s press conference in Rome, highlighting Italy’s cautious approach to divesting from the historic lender.

Government’s Shareholding in Monte dei Paschi

Italy acquired a 68% stake in MPS following a 2017 bailout to stabilize the bank, which had been struggling with bad loans and capital shortfalls. Over the past two years, the government has gradually reduced its stake to less than 5% through share placements and following MPS’ successful takeover of Mediobanca.

“Today we have less than 5%. I don’t rule out selling it, but there’s no rush,” Meloni said.

Following her comments, MPS shares rose by up to 1.28%, reflecting investor optimism about the possibility of eventual privatization or merger activity.

Future Plans for Monte dei Paschi

Reuters previously reported that Rome is considering a future merger as a way to further reduce its stake. One long-term plan under discussion involves a potential combination of MPS with Banco BPM, creating a third major player in Italy’s banking sector alongside UniCredit and Intesa Sanpaolo.

Meloni stressed that while the government holds a minor stake, the prospect of a stronger banking competitor would benefit the Italian financial system:

“I think that (a third leading banking group) would be beneficial to our banking system as a whole, but the government does not have the authority or the means to do this.”

Legal Investigation and Market Confidence

The Prime Minister also addressed ongoing legal scrutiny over MPS’ acquisition of Mediobanca, saying she was not concerned about investigations by Milan prosecutors.

The probe focuses on MPS CEO Luigi Lovaglio and major shareholders including construction magnate Francesco Gaetano Caltagirone and EssilorLuxottica CEO Francesco Milleri, who controls the Del Vecchio family’s Delfin vehicle. Prosecutors are examining whether these parties acted in coordination without informing regulators and investors.

Meloni reiterated that authorities had confirmed there was no illegality in the government’s actions, reinforcing confidence in the stability of the bank and its operations.

Implications for Italy’s Banking Sector

The gradual reduction of Italy’s stake in MPS reflects a broader effort to normalize the banking sector after years of state intervention. A future merger or privatization could create a more competitive banking landscape and improve capital efficiency, benefiting both investors and customers.

Investors and analysts will be watching for any further government announcements or merger developments that could reshape Italy’s banking hierarchy.