ROME, Oct 15 (Reuters) - Italy's Treasury is considering
extending by six months tax breaks for corporate mergers it
first introduced to entice a buyer for troubled state-owned bank
Monte dei Paschi di Siena (MPS), two sources close to
the matter said.
The scheme applies to all companies, but it benefits mostly
banks and is a key plank of an incentive package the Treasury
has tabled to sell MPS to stronger rival UniCredit.
The extension would give UniCredit more time to approve the
purchase of "selected parts" of MPS it has been discussing with
the Treasury since early August.
In their current form, the tax breaks Rome introduced with
the 2021 budget allow banks to pay a fee to turn into tax
credits so-called deferred tax assets (DTAs) stemming from past
losses in the case of merger deals approved by directors or
shareholders by Dec. 31, 2021.
The Treasury is now considering extending that deadline to
June 30, 2022, the sources said.
UniCredit and MPS are still negotiating the terms of their
deal. While a preliminary accord is expected in the coming
weeks, according to several people close to the negotiations,
the formal approval that unlocks the incentives would require
UniCredit and MPS both declined to comment.
Italy's tax agency in September clarified the scheme can be
tapped for multiple, separate merger deals, which bankers said
potentially opened the door to three-way mergers were the
incentives to be extended.
The Treasury at present is planning to leave unchanged a cap
on the incentives set at 2% of the assets of the smaller bank
involved in the merger, the sources said.
Earlier this year the Treasury tried to push through
measures to extend the incentives and raise the cap to 3%, but a
political pushback forced it to shelve the changes, which would
have been very costly.
Sources said at the time the ministry could review the cap
and the timeframe of the incentives at a later stage.
The scheme has met resistance within Prime Minister Mario
Draghi's coalition where many politicians are against using
taxpayers' money to spur bank mergers and could still try to
block the Treasury's push to lengthen the incentives.
In its current formulation, the scheme entails a 2.2 billion
euro ($2.6 billion) boost for a buyer of MPS.
Analysts see the incentives as a key consolidation driver
for the Italian market, where mid-sized lenders like Banco BPM
and BPER Banca are under pressure to seek a
tie-up after Intesa Sanpaolo last year snatched UBI,
the healthiest second-tier player, to cement its domestic
France's Credit Agricole earlier this year took
over regional bank Creval, benefiting from the incentive scheme.
($1 = 0.8614 euros)
(Reporting by Giuseppe Fonte in Rome and Valentina Za in Milan;
Editing by Jan Harvey)