MILAN (Reuters) – Intesa Sanpaolo’s (ISP.MI) successful battle for rival UBI (UBI.MI) has sent shockwaves through Italy’s fragile banking industry as financiers attempt to work out who’ll be following in a market ripe for consolidation. FILE PHOTO: The emblem of Italian bank Intesa Sanpaolo is observed in Milan, Italy, January 18, 2016. REUTERS/Stefano Rellandini/File PhotoThe unsolicited bid, Europe’s biggest banking deal in a decade, has set the platform for additional mergers in the fragmented industry as pandemic-induced losses mount, adding to creditors’ present struggles with negative rates of interest and also the need into adapt to some fast-changing electronic world. Critics say that its European Central Bank’s support for the UBI bidding and Intesa’s usage of “badwill” – purchasing UBI in a discount to its publication value and pocketing the gap as gain – might encourage more banks to pursue tie-ups as a means to decrease costs. “The Intesa deal has ushered in a new phase,” an Italian banker stated. “We now know that hostile banking takeovers aren’t just possible but can succeed.” What isn’t clear is who will do the purchasing. By snapping up the healthiest second-tier creditor, Intesa has eliminated the offender slated to direct long-awaited prices between the number of mid-market players that are most in danger from the dangers confronting the industry. But, Alberto Nagel, the mind of Intesa’s main adviser Mediobanca, said on Thursday talks were intensifying as CEOs attempted to place their banks for possible M&A scenarios. Citi analysts have predicted a fixed return on equity of just 2% for Italian banks annually, with just “some signs of recovery” in 2021-2022. “The Italian banking system has to move on from the sub-par profitability of the last decade,” Scope Ratings Executive Director Marco Troiano said. TAKE THE PLUNGE The most obvious candidate to take the plunge on a future bargain is Banco BPM, Italy’s third-largest bank formed three decades ago when Banca Popolare di Milano and Banco Popolare merged. Running in Northern Italy in which the joint Intesa-UBI will be dominant, sources with knowledge of this issue have told Reuters it has come under pressure in Italy’s treasury to purchase Monte dei Paschi di Siena, the problem child of German banks today 68% owned by the nation. Banco BPM has repeatedly denied any attention. Bankers say it might instead become a goal for France’s Credit Agricole (CAGR.PA) or BNP Paribas (BNPP.PA), that can be equally within Italy and may reduce prices through a merger. A source familiar with the issue said the potential for a French bid for Banco BPM has raised alarm among a few of those Milanese bank’s domestic shareholders, who’d favourably see a tie-up together with Italy’s largest lender UniCredit (CRDI.MI) that replicated the Intesa-UBI deal. Another source confirmed this type of mix will please Banco BPM’s banking base shareholders. However UniCredit, under CEO Jean Pierre Mustier, has lately distanced itself from the home turf by dropping domestic assets and decreasing exposure to Italy’s 2.5 trillion euro ($2.9 trillion) public debt heap. Mustier has mastered any M&A action but the very first source said that the bank’s plan could alter whether the French banker, who earlier this season turned into the top job at HSBC, would be to depart after overseeing an effective restructuring. The Intesa-UBI deal can also be set to raise the part of BPER Banca (EMII.MI), which can be purchasing 532 branches in the joint group allowing Intesa to win antitrust approval. FILE PHOTO: The headquarter of UBI bank is observed in Brescia, Italy, March 9, 2016. REUTERS/Alessandro Bianchi/File PhotoBPER, whose best shareholder is insurance UnipolSAI (US.MI), was discussing a merger with UBI just weeks before Intesa introduced its bidding. CEO Alessandro Vandelli has stated BPER will seem to play a significant part in banking consolidation when it incorporates the branches purchased from Intesa. Agents for Banco BPM, UniCredit, Credit Agricole and BNP Paribas declined to comment for this story. Additonal coverage by Gianluca Semeraro at Milan and Maya Nikolaeva at Paris, editing by Rachel Armstrong, Kirsten DonovanOur Standards:The Thomson Reuters Trust Principles.