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By Valentina Za and Andrea Mandala
MILAN (Reuters) -A bid by Italy's third-largest bank Banco BPM to acquire full control of fund manager Anima Holding sent shares of both soaring on Thursday.
Shares in the Milanese bank closed up 9%, hitting their highest level since January 2016, after it said that it would launch a 1.6 billion euro ($1.7 billion) bid for the Anima shares it does not own.
Banco BPM will use its insurance business, which allows it to minimise the use of capital thanks to favourable rules known as 'Danish compromise'.
The rules allow a bank to risk-weigh an insurance holding, instead of deducting it from capital.
The Danish compromise rule became permanent this year and authorities have clarified it also applies to the assets a bank buys via its insurance arm.
"A smart move on a smart company," Deutsche Bank said in a note, adding the impact on capital and returns was also "smart".
The proposed deal, which will prop up Banco BPM's revenues in the face of declining interest rates, is the latest sign of pressure to consolidate in the savings management industry.
Banco BPM's main shareholder is French bank Credit Agricole, whose asset manager Amundi had also taken a stake in Anima in 2022 through funds managed on behalf of clients.
Amundi's move had triggered concerns in Italy about the possibility that Anima, which is a large investor in Italian government bonds, could fall into foreign hands, after UniCredit sold its fund manager Pioneer to Amundi in 2017.
Barclays analysts said the deal raised a question mark over Anima's ability to preserve its partnerships, in particular for the sale of products to retail clients.
This would be the case, for example, of Anima funds sold to customers in branches of Monte dei Paschi, which is 27% owned by the Italian state after a bailout in 2017.
The Monte dei Paschi contract runs to 2030 and does not include a change of control clause linked to Anima's ownership.
Shares in Anima rose 11% to 6.38 euros, above the 6.2 euros a share Banco BPM is offering other investors.
Bankers and analysts predicted a swoop by BNP Paribas on the asset manager of insurer AXA would encourage more banks to buy fund managers via their insurance arm, taking advantage of what Mediobanca Securities analyst Andrea Filtri dubbed "Danish Compromise Squared."
Banco BPM is Anima's biggest shareholder with a 22.3% stake. Anima is 9.8% owned by Italian private equity fund FSI, which is already a partner of Banco BPM in payments.
Poste Italiane owns another 12% of Anima, which manages Poste's insurance reserves.