Arbitration likely in Banco BPM insurance row with Cattolica -sources

MILAN (Reuters) – Banco BPM and Cattolica are likely to turn to arbitration after Italy’s third-largest bank said it would exercise a call option to buy the insurer’s stakes in their insurance joint-ventures, two sources said on Wednesday.

Banco BPM invoked a change of control clause on Tuesday after Italy’s biggest insurer Generali in June agreed to buy 24.4% of Cattolica to become its single largest investor, a move analysts say will make it easier for the bank to be involved in consolidation..

It said that Cattolica, despite repeated requests, had refused to provide any information over Generali’s investment, while the insurer said Banco BPM had no grounds for its move.

An arbitration decision is likely to be necessary to settle the dispute, the sources told Reuters, adding that relations between the parties had deteriorated partly as a result of unsatisfactory results from the insurance partnership.

Banco BPM and Cattolica both declined to comment.

Banco BPM was forced to act by a deadline to exercise the call option linked to the change of control, the sources said.

However, resolving the joint venture will also simplify Banco BPM’s ongoing search for a partner.

Three sources familiar with the matter told Reuters last week Banco BPM was considering a tie-up with smaller rival BPER, whose top investor is insurer UnipolSAI

“The move would improve Banco BPM’s position in any M&A deal as it would leave Banco BPM with free hands to negotiate new ‘bancassurance’ partnerships in any M&A deal, and in particular in a deal with BPER”, Banca IMI analysts said.