UniCredit in talks to merge with Société Générale

Shares in both entities rose on Monday due to the speculation created around the merger. UniCredit shares rose as much as 4% before falling while SocGen's early gains of 3% more than halved by the afternoon.

Negotiations on the potential merger, sparked by UniCredit chief executive Jean Pierre Mustier, are at an early stage and could be delayed by the recent political turmoil in Italy, according to the newspaper. The FT said neither bank would be ready to close an agreement until at least next year.

The merger could create a bank with combined total assets of over $2.5trn which would put the new bank in direct competition with HSBC to be Europe's largest lender in terms of assets.

UniCredit last year considered a possible merger with Germany's Commerzbank. Sectoral concentration among European banks has been a hot topic for months amid low interest rates and erosion of profits.

In September, Mustier told Bloomberg News that UniCredit had not planned large corporate operations until 2019. "Our plan is an organic plan, we will promote and develop the activity on a purely organic basis until the end of the plan.”

“And after 2019, all the options are open and we will see what are the best alternatives," he added.

Société Générale denied "any discussion of the board on a possible merger with UniCredit" in an email to reporters on Monday. UniCredit declined to make any statement.