A possible new force in Italian banking has begun to take shape, after regional lender Banco BPM SpA took a major stake in rival Banca Monte dei Paschi di Siena SpA.

Italy has begun to pave the way for a third big banking group in the country by selling a chunk of state-owned Monte dei Paschi di Siena (MPS) to rival Banco BPM and the fund manager partner of both lenders.

Banco BPM, a major Italian bank, has acquired a 5% stake in MPS, aligning with its strategy while maintaining a standalone approach.