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.

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.

Investing.com - Shares in Banca Monte dei Paschi di Siena (BIT: BMPS) surged after Italy sold 15% of its stake in the bailed-out lender, raising 1.1 billion euros ($1.16 billion).

Italian state-controlled bank Monte dei Paschi di Siena on Friday hiked its profit goal for the year after reporting a larger than expected 31% yearly rise in third quarter income.

Italy is selling a 7% stake in Monte dei Paschi di Siena SpA, the latest step in an exhaustive restructuring drive that dates back to 2017.