UniCredit's Golden Power Struggle: When Rome vs. Brussels Threatens a Banking Giant

The Italian government’s use of its “golden power” to impose stringent conditions on UniCredit’s proposed acquisition of Banco BPM has sparked a high-stakes clash between national sovereignty and EU regulatory authority. This corporate battle isn’t just about banking synergies—it’s a test of who holds the keys to Europe’s financial future. Let’s dissect the risks, rewards, and regulatory minefields shaping this $10.1 billion deal.

The Golden Power Decree: Italy’s Play for Control

Italy’s government, invoking its golden power—a tool historically reserved for blocking foreign takeovers—has demanded UniCredit comply with four onerous conditions to proceed with the Banco BPM deal:
1. Divest €22.2B in Southern Loans by 2025: To avoid monopolistic dominance, UniCredit must offload a massive chunk of its Italian loan portfolio.
2. Maintain a 13.2% CET1 Ratio: A capital buffer requirement that analysts warn could trigger regulatory panic if breached.
3. Exit Russia by End-2025: Despite already reducing exposure by 90%, UniCredit faces geopolitical mandates that could slash equity value by ~11%, per Mediobanca.
4. Operational Restrictions: Retain Banco BPM’s branch network and asset manager Anima Holding for five years, limiting cost synergies.

The move has drawn sharp criticism, as golden power has never before been applied to a domestic merger. Prime Minister Giorgia Meloni’s government justifies it as a “national security” play, but critics see political maneuvering—especially given Banco BPM’s role in a separate proxy battle over Assicurazioni Generali.

Brussels Strikes Back: EU’s Antitrust and Subsidy Scrutiny

The European Commission has until June 4 to approve or block the deal under its antitrust and foreign subsidy rules. The EU’s concerns?
- Market Dominance: The merged entity would control 26% of Italy’s banking assets, raising competition red flags.
- Subsidy Scrutiny: UniCredit claims no foreign subsidies are involved, but the EU’s 2023 Foreign Subsidies Regulation requires scrutiny of any state support, including implicit guarantees.

A rejection could unravel the deal, leaving UniCredit with a €1.3B synergy windfall in limbo.

UniCredit’s Dilemma: Proceed or Perish?

UniCredit’s CEO Andrea Orcel calls the terms a “violation of market principles,” noting the ECB already approved the deal. The bank faces a stark choice:
- Proceed: Accept the constraints, risking capital strain and investor distrust (its shares trade at a historic low 0.6x price-to-book ratio).
- Withdraw: Abandon years of planning but avoid regulatory fines and operational chaos.

The financial stakes are stark. A rushed divestment of €22.2B in loans could force fire sales, eroding capital buffers. Meanwhile, the Russian exit clause alone threatens an 11% equity haircut. Banco BPM shareholders, already rejecting the bid as undervalued, demand a higher premium—currently just 0.175 shares per Banco BPM share, a 9% discount.

Market Impact: Investors Are Already Voting with Their Feet

UniCredit’s stock has been pummeled, down 3% since the golden power decree, while Banco BPM’s shares trade at a premium to the offer price. The broader Italian banking sector index (.FTSEBANK) has dropped 5% year-to-date, reflecting investor skepticism.

Analysts warn that even if the deal proceeds, UniCredit’s ability to navigate the divestment timeline (by December 2025) and maintain its 13.2% CET1 threshold will determine its survival. A delay could force capital raises or restructuring, further depressing its already battered valuation.

Deadlines Loom: June’s Crucible

• June 4: EU’s antitrust verdict. A rejection could trigger a legal battle extending into 2026.
• June 30: UniCredit’s final decision. Withdrawal would end the saga but likely depress its shares further.

Conclusion: A Gamble with High Stakes for Investors

This isn’t just about UniCredit—it’s a litmus test for EU regulatory unity and investor confidence in Italy’s business climate. The key metrics to watch:
- Divestment Execution: Can UniCredit offload €22.2B in loans without capital erosion?
- EU’s Final Say: Will Brussels override Rome’s overreach?
- Market Sentiment: Will UniCredit’s price-to-book ratio (0.6x) rebound, or sink further if the deal fails?

For investors, the path forward is fraught. Proceeding under the terms risks short-term pain for long-term gains (€2B in synergies by 2028), while withdrawal leaves UniCredit to chase other deals—or face perpetual underperformance. The EU’s June 4 ruling and UniCredit’s June 30 decision will decide whether this becomes a case study in regulatory overreach or a blueprint for corporate resilience.

One thing is clear: in the clash between Rome’s golden power and Brussels’ rulebook, no one wins if the banking sector’s credibility goes up in smoke.