Intesa Sanpaolo, an Italian banking group, has launched a €4.9bn bid to acquire smaller rival UBI Banca.

The deal, if materialised, would lead to the creation of the seventh-largest group by assets in the euro zone with €1.1 trillion in assets.

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The combined group would increase Intesa’s client base by three million if the deal goes through. The plan is to close the deal by 2020-end.

Intesa considers UBI Banca among the best banks in the country.

Intesa said: “UBI Banca has local entrenchment in the most dynamic regions of the country, enjoys outstanding results that have been achieved thanks to the excellent job of both its CEO and its management team, and has a sound Business Plan.

“All this can continue to be achieved and be indeed further enhanced in the combined Group.”

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The move by Intesa is the first attempt at consolidation by an Italian lender. The government has been urging banks for the same lately in order to lower costs and improve profits.

UBI Banca and Intesa Sanpaolo have many similarities. To avoid antitrust concerns after the deal, Intesa plans to offload 400-500 branches of the merged group to BPER Banca and some insurance assets to UnipolSai Assicurazioni.

Intesa further noted: “The combined Group’s profitability will benefit from expected run-rate pre-tax synergies of €730 million per year, €680 million by 2023 and a further €50 million by 2024, of which €510 million from costs (equal to around 5% of the combined Group’s 2019 pro-forma costs) and, taking revenue attrition into account, €220 million from revenues (equal to around 1% of the combined Group’s 2019 pro-forma revenues).”

The synergies are said to be the result of over 5,000 redundancies on a voluntary basis.