Unicredit Critiques Italian Government’s Intervention in Banco BPM Bid

Unicredit has voiced strong objections to the Italian government’s actions regarding hostile buyback bids aimed at Banco BPM, labeling the intervention as “illegal.” This follows a ruling from an Italian court that offered a partial victory against Giorgia Meloni’s government, which had imposed stringent conditions on the transaction. The Bank of Milanese argued that the court’s ruling clearly indicated the inappropriate use of government powers.

Led by CEO Andrea Orcel, Unicredit accused Banco BPM of disseminating misleading information concerning the impact of shareholder offers, heightening tensions between the two banks. Unicredit stated that BPM has engaged in “unfairly offensive and often misleading communications.” They also hinted that enhancing the financial terms of BPM’s offer—a possibility discussed earlier—might not happen. In this atmosphere of uncertainty, Unicredit expressed concern that BPM shareholders could be losing out on their options.

This ruling from the court upheld part of an appeal to cancel the government’s mandate on loan-to-deposit rates associated with the BPM merger, while also negating the government’s requirements for maintaining the financial portfolio of two Italian banks. However, it confirmed that the government’s stipulation for Unicredit to exit Russia if it wanted to proceed with the acquisition was deemed “completely legal.”

BPM released a statement on Saturday expressing satisfaction with the court’s decision, urging Unicredit to clarify its intentions regarding the deal.

Furthermore, Unicredit asserted that administrative courts lack authority over political matters. The bank noted that it fulfills the European Central Bank’s legal criteria, despite controversies surrounding its potential withdrawal from Russia—a significant point of contention between the government and financial institutions. Orcel conveyed that if the government does not relent on its demands, he might reconsider the deal.

Unicredit hasn’t disclosed whether it plans to delay the acquisition offer set to close on July 23. The court’s ruling entirely rescinds the prior government orders, leaving the contract in limbo until a possible reorganization of regulatory requirements occurs.

The decision ultimately rests with Unicredit’s board, which may opt to accept the government’s latest conditions or withdraw from the transaction altogether. Following the court’s ruling, BPM reiterated its satisfaction with the appeal’s outcome and called on Unicredit to provide clarity on its intentions regarding the acquisition. An immediate comment from an Italian government representative was not available.

As Italy’s second-largest lender, Unicredit had previously sought to expand by pursuing Banco BPM while also considering a deal with Germany’s Commerzbank. Although it has markedly decreased its exposure to Russia since the November 2022 invasion of Ukraine, it remains one of the few European banks still operating its local subsidiary. Orcel has so far resisted a complete withdrawal to avoid detrimental impacts on the bank’s balance sheet, with any exit requiring approval from Russian authorities.