Credit Agricole’s BPM Decision Hinges on What It Gets in Return

In early 2025, Credit Agricole’s decision to increase its stake in Banco BPM to 19.8% marked a pivotal move in its strategic calculus. The French banking giant is now navigating a complex landscape where regulatory approvals, M&A battles, and long-term partnership benefits intersect. As Credit Agricole’s CEO Philippe Brassac noted, the situation remains “too fluid” to commit to a definitive stance—yet the stakes are high. The question investors must ask is: What does Credit Agricole stand to gain, and what risks might it incur in this chess match?

Ask Aime: What gains does Credit Agricole stand to make, and what risks might it incur in its strategic acquisition?

The Strategic Play: A Steady Hand in Volatile Waters

Credit Agricole’s stake increase in Banco BPM is not merely a financial transaction but a strategic play to deepen ties in the Italian banking sector. The 19.8% holding positions it as a key player in the ongoing M&A battle, where UniCredit’s unsolicited bid for Banco BPM has turned the tables. While Credit Agricole has ruled out a public offer, its influence as a major shareholder could tilt negotiations in its favor. The bank has explicitly stated its focus on strengthening collaborations in consumer finance, non-life insurance, and creditor protection services—areas where Banco BPM’s local expertise complements Credit Agricole’s broader European footprint.

The move aligns with Credit Agricole’s broader priorities outlined in its Q1 2025 results: expanding wealth management through acquisitions (e.g., Banque Thaler in Switzerland) and leveraging partnerships like its Amundi-Victory Capital alliance to boost asset management. However, the Banco BPM stake also carries risks.

Financial Implications: A Slight Dip, But Capital Strength Remains

The derivatives-based stake increase has already had a measurable impact on Credit Agricole’s capital ratios. While the Q1 2025 CET1 ratio remained robust at 12.1% (phased-in), the bank projected a 20 basis point decline in Q2 due to regulatory deductions for equity investments in financial institutions. This underscores the trade-off: the stake deepens strategic ties but requires capital allocation.

Investors should note that Credit Agricole’s overall capital position remains strong. The Group’s CET1 ratio sat at 17.6% as of Q1 2025, well above regulatory requirements. This buffer provides flexibility to absorb the Banco BPM stake’s regulatory drag while pursuing other growth initiatives, such as its €6 billion in low-carbon energy financing or its €2.25 trillion in Amundi’s AUM.

The M&A Crossroads: UniCredit’s Bid and the Price of Partnership

UniCredit’s unsolicited offer for Banco BPM has turned the Italian banking sector into a high-stakes arena. Credit Agricole’s stance will depend on the terms of UniCredit’s proposal. If UniCredit’s bid offers value to Banco BPM shareholders—including Credit Agricole—the French bank may acquiesce. However, its 19.8% stake could also be leveraged to demand concessions, such as governance changes or cross-sector collaboration.

The ECB’s approval of Credit Agricole’s stake increase signals regulatory confidence in the bank’s ability to manage risks. Still, the Bank of Italy’s final authorization remains pending, adding a layer of uncertainty. Should the deal collapse, Credit Agricole’s derivatives position could prove costly if Banco BPM’s shares underperform.

Sustainability and Growth: Beyond the Immediate Stake

Credit Agricole’s broader strategy offers a counterbalance to the Banco BPM risks. Its 30% reduction in fossil fuel financing since 2020 (to $0.96 billion) and 141% surge in low-carbon financing to €26.3 billion by 2024 highlight its alignment with ESG trends. Meanwhile, its €4 billion in net inflows for savings products and 46% growth in French home loans demonstrate resilience in core markets.

These initiatives, combined with its €5.467 trillion in asset servicing, suggest that Credit Agricole’s long-term growth is not solely contingent on Banco BPM. Yet the Italian stake remains a critical test of its ability to navigate cross-border partnerships in an era of fragmented EU banking regulations.

Conclusion: A Calculated Gamble with Clear Upside

Credit Agricole’s decision to deepen its Banco BPM stake hinges on securing strategic advantages that outweigh the capital costs. With its CET1 ratio at a healthy 12.1% and a robust capital buffer, the bank can afford the 20-basis-point dip while pursuing synergies in insurance and consumer finance. The M&A battle with UniCredit adds volatility, but Credit Agricole’s position as a major shareholder grants it leverage to negotiate favorable terms—or hold out for a higher payout.

The numbers tell the story: a 19.8% stake in Banco BPM, a €26.3 billion bet on low-carbon energy, and a 17.6% Group CET1 ratio all signal a bank that’s both risk-aware and growth-oriented. For investors, the key takeaway is this: Credit Agricole’s move is less about immediate returns and more about fortifying its position in a consolidating European banking market. If the partnership with Banco BPM delivers on its promises, the gamble could pay off handsomely. If not, Credit Agricole’s diversified portfolio and strong capital base ensure it has room to pivot.

In an industry where strategic partnerships are as vital as capital ratios, Credit Agricole’s calculated move underscores its ambition to be a leader—no matter the outcome of the BPM chess match.