Giorgetti's Golden Power Play: A Strategic Defense of Financial Sovereignty

The Italian government’s recent assertive use of the “Golden Power” mechanism—a legal tool enabling state intervention in strategic banking transactions—has ignited debates over national sovereignty versus EU regulatory authority. At the center of this is Giancarlo Giorgetti, Italy’s Finance Minister as of 2025, who has defended the government’s right to assess banking operations that risk destabilizing national interests. This article examines the implications of Giorgetti’s stance for investors, analyzing its impact on Italy’s banking sector, fiscal health, and geopolitical dynamics.

The Golden Power in Action: UniCredit and Banco BPM

Giorgetti’s most contentious move involved imposing conditions on UniCredit’s (UNCR) takeover bid for Banco BPM (BAMPS), a deal valued at approximately €7 billion. The Italian government leveraged Golden Power to demand UniCredit’s withdrawal from Russia—a strategic shift aligning with post-sanction policies—and to protect regional banking competition.

The ECB and European Commission criticized the intervention, arguing it overstepped national authority into their jurisdiction. Yet Giorgetti’s stance reflects a broader strategy to safeguard Italy’s financial stability amid rising geopolitical risks.

UniCredit’s shares dipped 5% following the Golden Power intervention, though they have since rebounded, underscoring market uncertainty over regulatory friction.

Privatization and Fiscal Discipline: A Dual Strategy

Giorgetti’s broader agenda includes privatizing state-owned banks like Monte dei Paschi di Siena, which required a €6.5 billion bailout in 2017. The sale of these institutions aims to reduce Italy’s public debt, projected to hit 137.8% of GDP in 2026, while attracting private capital.

The government’s fiscal reforms, including austerity measures and alignment with OECD tax standards, have garnered recognition. In 2024, Fitch Ratings upgraded Italy’s outlook to positive, citing improved fiscal discipline and adherence to EU rules—a direct outcome of Giorgetti’s policies.

Despite privatization efforts, debt remains elevated, highlighting the fragility of Italy’s fiscal recovery.

Geopolitical Risks and EU Tensions

Giorgetti’s defense of Golden Power occurs amid spillover risks from Germany’s economic slowdown, which threatens northern Italy’s industrial hubs. The minister has also pushed for coordinated global policies at G20 and G7 forums, advocating for simplified tax frameworks to avoid unilateral measures that could destabilize cross-border investments.

However, the ECB’s irritation over Italy’s unilateral interventions signals deeper institutional friction. If unresolved, this could complicate access to EU funds or create regulatory uncertainty for banks like Intesa Sanpaolo (ISP) and Banco BPM, which rely on cross-border operations.

Investor Implications: Navigating Sovereignty vs. Integration

For investors, the Golden Power saga presents a dual-edged scenario:
1. Opportunity: Privatizations could unlock value in underperforming state-owned banks, while fiscal reforms aim to stabilize Italy’s debt trajectory.
2. Risk: Regulatory disputes with the EU may deter foreign investment, especially in banking stocks exposed to cross-border activities.

The MIB underperformed the Euro Stoxx 50 by 8% in 2024, reflecting market anxiety over Italy’s fiscal and geopolitical challenges.

Conclusion: A Delicate Balance

Giorgetti’s Golden Power strategy underscores Italy’s push to assert financial sovereignty while addressing structural banking challenges. Privatizations, fiscal austerity, and alignment with international standards have bolstered investor confidence, as evidenced by Fitch’s upgraded outlook and reduced borrowing costs.

However, the ECB’s resistance and geopolitical risks—such as Germany’s economic slowdown—pose significant hurdles. Investors should monitor two critical metrics:
- EU-Italy regulatory negotiations: A compromise could ease uncertainty for banking stocks like UNCR and ISP.
- Debt-to-GDP reduction: Italy needs to lower its debt burden below 130% by 2030 to sustain its fiscal credibility.

In sum, Giorgetti’s policies reflect a high-stakes balancing act. While his assertive stance defends national interests, the ultimate success hinges on navigating EU tensions without stifling the very private sector growth he seeks to foster. For now, the Golden Power remains both a shield and a sword in Italy’s financial arsenal.