Consolidation is coming to Italy’s banking sector, and not a moment too soon. The planned €29.43 billion merger between Banca Intesa and Sanpaolo is expected to kick-start an M&A frenzy in a country that has one of the most fragmented, least modernized and most expensive (at least for customers) banking industries in the developed world. So this deal is, on the whole, good news. But it hardly signals the end of political considerations and economic nationalism as major factors in the banking sector.

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