UniCredit withdraws offer for BPM after opposition from Meloni’s government

UniCredit has officially withdrawn its bid to acquire the smaller rival Banco BPM following strong opposition from Prime Minister Giorgia Meloni’s government, as well as continuing regulatory hurdles linked to Italy’s so-called “golden power” rules. The move comes just days after the European Commission issued a sharp reprimand against the Italian government for interfering with the banking sector deal, signaling tensions between national interests and European market regulations. In an interview with Italy’s Class CNBC on Wednesday, UniCredit’s chief executive, Andrea Orcel, described the bid as having become “a drag” on the bank’s strategic priorities. He emphasised that UniCredit’s focus has now shifted toward consolidating its 20 percent equity stake in the German bank Commerzbank, a position it has been steadily increasing in recent months.

This announcement coincided with UniCredit’s release of better-than-expected quarterly results, which led the lender to raise its full-year profit outlook. The bank reported a net profit of €2.9 billion for the quarter, excluding one-off items, marking an 8 percent increase compared to the same period last year and surpassing analysts’ forecasts significantly. Based on these strong results, UniCredit now expects its full-year net profit to reach approximately €10.5 billion, well above the previous guidance of more than €9.3 billion. Investors received a welcome boost from this update, coming just hours after the bank confirmed its decision to withdraw the BPM offer.

UniCredit cited the decision to pull its offer as stemming from unsatisfied conditions attached to the government’s golden power authorisation. Introduced as a safeguard for strategic national assets, the golden power framework grants the Italian government the authority to impose stringent requirements or block foreign takeovers it deems could threaten national security. In the case of the Banco BPM deal, several conditions were imposed, including the requirement for UniCredit to divest its Russian operations within nine months after the deal’s completion. While an Italian court later ruled against two of the government’s conditions, two key provisions—including the exit from Russia—remained in force, continuing to complicate the acquisition.

Despite the European Commission’s recent ruling that the government’s insistence on these conditions contravenes EU market regulations, Rome has shown no indication that it will ease its stance. UniCredit described the outcome as a “missed opportunity” not only for its shareholders but also for the broader Italian economy, highlighting the potential benefits of banking sector consolidation in a fragmented market. The Milan-based lender is simultaneously engaged in negotiations with the German government regarding its ambitions to acquire a controlling stake in Commerzbank, a deal also facing political scrutiny

Andrea Orcel explained that the withdrawal from the BPM deal was largely due to “continued uncertainty” over how the golden power rules would be applied, adding that these regulatory provisions ultimately offered no advantage to UniCredit or its investors. The bank also noted that the normal offer process was hindered by the consistent push from BPM’s leadership for the golden power application, preventing UniCredit from engaging with BPM shareholders in a typical takeover process fashion. Banco BPM itself called on UniCredit last week to clarify its intentions, citing the prolonged uncertainty and lack of progress as damaging to its own shareholders.

The initial €10 billion bid from UniCredit was announced in November, shortly after it increased its stake in Commerzbank. The proposal took the Italian government and market observers by surprise and met immediate rejection from Banco BPM’s management. Meanwhile, the Italian government has been actively pursuing a different strategy—encouraging a merger between Banco BPM and Monte dei Paschi di Siena (MPS), a bank that Italy had to rescue during the 2008 financial crisis and subsequently nationalized. This planned merger is part of Rome’s ambition to build a third major banking pillar in Italy to rival the dominant UniCredit and Intesa Sanpaolo, which together control significant portions of the country’s banking sector.

In summary, UniCredit’s withdrawal marks the end of a protracted and complex attempt at banking consolidation in Italy, heavily influenced by government protections intended to secure national strategic interests. While the bank remains committed to its growth plans, particularly in Germany, this episode underscores the challenges posed by political and regulatory interference in European banking mergers. The situation also highlights the delicate balance between national sovereignty and EU market rules, a dynamic that will continue to shape the future of cross-border banking transactions in the region.

Jake Robson