The merger pledge has been a long and hectic, but a final unification date has been set. Banco Popolare and Banca Popolare di Milano, two banks from northern Italy, have been discussing a possible union for months.

Their proposed merger—the first big one in the euro zone since the European Central Bank (ECB) took over supervision of the currency area’s biggest lenders in 2014—would create Italy’s third-biggest lender, and perhaps kickstart an overdue consolidation of Italian banks. But the ECB’s demand that the merged bank hold a bigger cushion of capital and dispose of its bad debts faster almost pushed the couple apart. In the end, however, Banco Popolare agreed to raise €1 billion in capital to smooth the path to the altar.

Shares in Italian banks are down by 25% so far this year; Monte dei Paschi di Siena (MPS), the world’s oldest and Italy’s third-biggest bank, has lost 51% of its value. Part of the problem is that there are simply too many of them: Italy has more bank branches than restaurants. It has 64 for every 100,000 people, far more than the euro-area average of 37. The branches belong to some 680 banks. The five biggest of these account for just 40% of the market, compared with a euro-area average of 63%.

The combination of this oversupply and Italy’s long recession has left Italian banks with among the lowest returns on equity in the euro zone, at 5.1% on average. Many are part-owned by local, politically connected foundations, which has often resulted in poor governance. Non-performing loans amount to €360 billion ($400 billion), 18% of the total. Of that, €202 billion are especially troubled, up by 9% on a year ago. Given how heavily small- and medium-sized businesses—which account for 90% of the total in Italy—rely on bank financing, that bodes ill for the country’s lacklustre economic recovery.