UniCredit’s Banco BPM Bid: A Clash of Strategy and Sovereignty

The Italian government’s conditional approval of UniCredit’s bid for Banco BPM has thrown the transaction into limbo, with the lender now demanding clarity on onerous conditions that threaten the deal’s financial viability. The dispute, rooted in national security concerns and regulatory overreach, underscores a broader tension between corporate ambition and state power in Europe’s banking sector.

The Italian government’s “golden power” — a mechanism to block transactions deemed harmful to national security — has been wielded aggressively in this case. Approved on April 22, 2025, the takeover is conditional on UniCredit agreeing to a series of prescriptions: exiting Russia by 2026, maintaining specific credit levels for Italian businesses, and ensuring compliance with investments linked to Anima Holding, a state-backed entity managing Italy’s strategic assets. The bank has labeled these terms unclear and inconsistent with prior approvals from the ECB and Bank of Italy, which greenlit the deal on purely financial grounds.

UniCredit’s CEO, Andrea Orcel, has framed the government’s demands as an overreach. “We’ve already met the ECB’s strict requirements,” he argued, questioning why the state could now impose conditions absent in earlier approvals. The bank has formally sought clarifications and hinted at legal challenges, including an appeal to Italy’s Regional Administrative Court. Meanwhile, Banco BPM has maintained its opposition to the bid, which it deems undervalued, while its robust CET1 ratio of 13% — well above the ECB’s 9.18% minimum — reinforces its confidence in standalone viability.

The financial stakes are significant. The deal’s success hinges on whether UniCredit can absorb the costs of unwinding its Russian operations (which contributed €245 million to 2023 profits) and still realize strategic benefits in Lombardy, where Banco BPM’s branch network strengthens UniCredit’s position. Yet the government’s terms risk undermining the transaction’s economics.

Market reactions have been muted thus far, but the uncertainty has clouded UniCredit’s broader expansion plans. Its 25% stake in Germany’s Commerzbank, for instance, could face similar scrutiny if European regulators adopt a fragmented approach to “strategic” transactions.

The case also raises questions about the ECB’s authority. If national governments can override ECB approvals under “golden power,” it weakens the central bank’s role in banking supervision and risks fragmenting regulatory standards across the Eurozone.

In conclusion, UniCredit’s Banco BPM bid is now a test of Italy’s regulatory coherence and the limits of state intervention in corporate strategy. With UniCredit’s share price down 3% since the government’s demands emerged and Banco BPM’s stock trading below the bid offer, the financial penalties of a collapsed deal could be severe. Yet the bank’s legal options — including a challenge to the government’s use of “golden power” in a cross-border transaction — offer a glimmer of hope.

Ultimately, this dispute may redefine the boundaries of corporate-state relations in European banking. If the government prevails, it sets a dangerous precedent for lenders seeking cross-border consolidation. If UniCredit wins, it could embolden banks to push back against overreach. Either way, investors must prepare for a prolonged standoff — one that could reshape Italy’s financial landscape for years to come.