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The scheme, which applies to all companies but mostly benefits banks, was a key plank of the incentive package the Treasury had tabled to sell ailing bank Monte dei Paschi di Siena (MPS) to bigger rival UniCredit.
However, talks over the potential merger deal collapsed on Sunday, marking a major setback to Italy’s years-long efforts to re-privatise MPS..
The end of the negotiations raised doubts on the market about whether the incentives would be renewed, as had previously been indicated by government officials.
The draft showed Rome plans to prolong the tax breaks to end-June 2022 from Dec. 31 2021 at present.
The budget sets a new cap for the mergers at between a minimum of 500 million euros and the current cap of 2% of assets of the smaller company involved, according to the draft.
Lenders will also be able to tap the incentives and complete the merger procedures within two years of having bought a controlling stake, the draft says, rather than within one year as currently established.
Analysts see the tax breaks as a significant consolidation driver for the Italian market, where more tie-ups are expected to follow Intesa Sanpaolo (OTC:ISNPY)’s takeover of UBI, the healthiest second-tier player.
