Davide Leone's Strategic Deepening of Stake in Banco BPM: Implications for Independence, Governance, and Capital Restructuring

Davide Leone, a prominent investor with a history of identifying undervalued assets in volatile markets, has significantly deepened his stake in Banco BPM, an Italian banking giant navigating a complex regulatory and strategic landscape. As of July 17, 2025, Leone's ownership in the bank surged to 8.17%, up from 5.3%, with 2.15% of that stake representing voting rights. This move, disclosed in filings with Italy's market watchdog Consob, raises critical questions about Banco BPM's independence, governance dynamics, and capital restructuring plans amid recent M&A turbulence and regulatory shifts.

Strategic Context: A Bank at a Crossroads

Banco BPM's recent history has been shaped by a high-stakes takeover battle with UniCredit. In July 2025, UniCredit withdrew its €10 billion bid for Banco BPM due to regulatory hurdles involving Italy's “golden power” mechanism, a tool used to block foreign takeovers deemed to threaten national interests. This withdrawal has left Banco BPM in a stronger position to pursue its own strategic initiatives, including its aggressive push into asset management through the acquisition of Anima Holding. However, the bank now faces the challenge of aligning its capital structure with evolving EU regulations, particularly the application of the “Danish Compromise,” which allows banks to hold capital against insurance holdings on a risk-weighted basis.

Leone's increased stake comes at a pivotal moment. His investment, held through subsidiaries DL Partners Opportunities Master Fund Ltd and DL Partners A Fund LP, includes both voting rights and non-voting long positions. While there is no evidence of board-level representation, his influence is amplified by the timing of the investment—post- UniCredit's exit and during the ECB's scrutiny of Banco BPM's Anima acquisition. This suggests a calculated bet on Banco BPM's ability to navigate regulatory complexities and emerge as a stronger, more independent entity.

Governance Implications: A Shift in Shareholder Power

The concentration of voting rights in key shareholders like Leone could reshape Banco BPM's governance structure. With 2.15% of the bank's shares carrying voting power, Leone's voice in shareholder meetings and strategic decisions becomes more pronounced. This is particularly relevant as Banco BPM seeks to finalize its Anima acquisition, which requires regulatory approvals and shareholder votes.

The bank's largest shareholder, Crédit Agricole (19.804%), has also been maneuvering to increase its stake through derivative instruments, potentially triggering a new round of governance debates. In this environment, Leone's stake could act as a counterbalance, ensuring that decisions remain aligned with long-term value creation rather than short-term strategic shifts. His support for proxy advisors like ISS and Glass Lewis in favor of raising the Anima bid price further underscores his role as a strategic influencer.

Capital Restructuring: Navigating Regulatory Constraints

Banco BPM's capital structure is under pressure from two fronts: the ECB's rejection of the Danish Compromise for the Anima acquisition and the need to maintain robust capital adequacy ratios amid potential future M&A. The ECB's stance—requiring the bank to treat Anima's goodwill as a full capital deduction—could force BPM to reduce dividends or raise additional capital.

Leone's increased stake may signal confidence in the bank's ability to adapt. By aligning with institutional investors who supported the Anima bid hike, he is positioning himself to advocate for capital-efficient strategies. For example, the bank's 97.64% shareholder approval for the Anima deal, despite regulatory uncertainties, highlights the market's belief in its long-term value.

Regulatory and M&A Dynamics: A Test of Resilience

The Italian banking sector remains a hotbed of regulatory intervention and strategic repositioning. The “golden power” mechanism, which blocked UniCredit's bid, has broader implications for cross-border mergers in the EU. For Banco BPM, this means a return to autonomy but also a need to navigate a fragmented regulatory landscape.

Leone's move also coincides with speculation about Crédit Agricole's potential to increase its stake in BPM through derivatives, a development that could trigger further governance tensions. However, the absence of a full takeover bid suggests that the bank's independence is likely to be preserved, at least in the short term.

Investment Thesis: Balancing Risk and Reward

For investors, the key question is whether Banco BPM can successfully integrate Anima while managing regulatory headwinds. The bank's strategic pivot to asset management, supported by shareholders like Leone, offers growth potential. However, the ECB's capital demands and the ECB-EBA regulatory tug-of-war over the Danish Compromise introduce uncertainty.

Recommendations:
1. Monitor ECB-EBA Rulings: A favorable regulatory outcome for the Anima acquisition could boost BPM's valuation.
2. Track Dividend Policy: If the bank reduces payouts to meet capital requirements, it may signal short-term pain but long-term stability.
3. Assess Governance Shifts: Increased shareholder activism, particularly from investors like Leone, could drive transparency and strategic clarity.

Conclusion

Davide Leone's strategic deepening of his stake in Banco BPM reflects a nuanced understanding of the bank's position in a volatile sector. By increasing his influence at a time of regulatory and strategic transition, he is not only protecting his investment but also shaping the bank's future. For investors, this move underscores the importance of aligning with stakeholders who prioritize long-term resilience over short-term gains. As Banco BPM navigates its post- UniCredit landscape, the interplay between governance, capital restructuring, and regulatory dynamics will define its path forward.