Italy’s banking sector is entering a major phase of consolidation, with some of the country’s largest financial institutions pursuing ambitious takeover strategies that could reshape the domestic banking landscape.

The biggest battle currently involves Intesa Sanpaolo, which has launched a roughly €35 billion cash-and-shares offer for Monte dei Paschi di Siena (MPS). The deal is aimed at strengthening Intesa’s position in the Italian financial sector and increasing its influence over other major institutions, including Mediobanca and insurer Generali.

MPS, meanwhile, has responded with its own plans involving Banco BPM and Banca Generali. The bank is using its existing stake in Generali as part of its strategy while seeking to expand its position in Italy’s competitive financial market.

The proposed transactions still face important regulatory hurdles. European Central Bank approval and competition authorities will have to examine the deals before they can proceed. Shareholder votes expected in October could also prove decisive.

Italy’s government is maintaining a neutral position for now. The state still owns around 4.9% of MPS, giving Rome a potentially important role as the competing banking strategies develop.

The banking developments come as Italy’s broader economy continues to show moderate growth. Official statistics indicate that GDP expanded by 0.2% in the second quarter, while industrial production returned to growth in July.

The outcome of the banking competition could have long-term implications for lending, investment, competition and Italy’s financial stability.