The new governor of the Bank of Italy has signalled his intention to open up the Italian banking market to merger activity, after transferring the bank's merger veto to the Italian antitrust authorities.
Governor Mario Draghi announced the move at the first annual meeting of the Bank of Italy since he assumed the governorship five months ago.
Bankers and lawyers both felt politics rather than economic analysis drove Draghi's predecessor Antonio Fazio's disapproval of mergers in the Italian banking sector.
Michele Crisostomo, a financial services regulation specialist at Clifford Chance in Milan, said the change in approach was welcomed: "The feeling is very positive among the lawyers. We may see more M&A transactions and, if we play a role on a transaction, we can rely more on the transparency of the central bank."
The first domestic merger is expected to be between Banca Intesa and Capitalia Italy's second and fifth-largest banks respectively. There is also talk of third-placed SanPaolo IMI and fourth-largest Banca Monte dei Paschi di Siena merging.
Italian heavyweight firms such as Bonelli Erede Pappalardo and Gianni Orgini Grippo would be the most likely to be briefed.
The antitrust authorities, Autorità Garante della Concorrenza e Mercato, would also look more closely at banks' services. Retail bank accounts in Italy are the most expensive in Europe, leading to allegations of price-fixing.
The Bank of Italy still holds some power to stop mergers because it is responsible for regulating the purchase of stakes in regional and national banks.