By Elena Vardon

Banca Monte dei Paschi di Siena pledged to return around 16 billion euros ($19 billion) to shareholders over the next five years and detailed targets for higher earnings as it progresses with the integration of recently acquired peer Mediobanca.

The Italian group, which is considered the world's oldest bank in operation and is still partly state-owned following a bailout, pursued its Milanese peer in a bid to marry Mediobanca's heft in investment banking and wealth management with its own retail banking strength. The tie-up, which created the country's third-largest lender by assets, is among the largest in a wave of consolidation sweeping the European banking sector.

At an investor day on Friday, the lender said it is targeting a net profit excluding one-offs of 3.7 billion euros in 2030 for the combined group, up from 2.4 billion euros in 2025.

The bank set a dividend payout of 100%, pledging to return all of its profits to shareholders over the course of the plan. It has a solid capital buffer of around 3 billion euros that could be distributed to investors or used for future deals, it added. Monte dei Paschi's largest shareholders are the influential billionaire families Del Vecchio--the heirs of the founder of eyewear maker EssilorLuxottica--and Francesco Gaetano Caltagirone, the construction magnate. The government retains a roughly 4% stake.

Revenue is projected to grow 4.6% annually to reach 9.5 billion euros by the end of the plan, supported by a larger contribution from its fee-based business and a more diversified revenue base, it said.

"With strategic clarity, disciplined execution, and a solid capital position, we embark on a new phase of value creation," Chief Executive Luigi Lovaglio said.

The Siena-based lender secured 86% of Mediobanca in September and intends to take the company private by buying the remaining 14% on the market. Delisting Mediobanca will allow the group to fully realize the targeted 700 million euros in efficiency savings. The bank aims to lower its cost-to-income ratio to 38% in 2030 from 46% last year.

Under a merger by incorporation, Mediobanca's corporate, investment, and private banking operations will be housed in a separate subsidiary that will retain the Mediobanca brand. This entity will also hold its prized 13% stake in top insurer Assicurazioni Generali.

A full merger plan and exchange ratio will be shared on March 10, the bank said.

Key corporate and governance steps are expected to wrap up by the end of 2026, followed by the full implementation of a unified operating and IT model. The combined group will operate across five specialized divisions: retail, consumer, wealth, private, and corporate banking.

Shares in Monte dei Paschi fell around 4% in European morning trade.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

February 27, 2026 05:54 ET (10:54 GMT)

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