Italian banks agree merger deal

New Bank of Italy boss Mario Draghi has called for consolidation

Banca Populare Italiana has agreed to merge with Banca Populare di Verona e Novara in a deal that would create Italy's third largest retail bank.

The lenders would have a combined market value of more than 15bn euros ($18.8bn; £10.1bn).

BPI had been looking for a suitor since its attempt to buy another rival, Banca Antonveneta, collapsed in 2005.

BPI was accused of colluding with Italy's central bank to exclude a competing bid from Dutch bank ABN Amro.

The scandal led to the departure of BPI chief executive Gianpiero Fiorani and Bank of Italy governor Antonio Fazio.

Mr Fazio's replacement, Mario Draghi, has spoken out in favour of greater consolidation in the Italian banking sector, which is still fragmented compared to other European Union countries.

Earlier this summer Italy's second and third-biggest lenders, Banca Intesa and Sanpaolo-IMI, agreed plans for a 29.6bn merger, which still needs to be signed off by shareholders in December.