UniCredit Withdraws 10.1 Billion Euro Bid for Banco BPM Citing Italian Government Regulatory Conditions

UniCredit SpA, Italy’s second-largest bank, has formally withdrawn its 10.1 billion euro ($11.9 billion) bid to acquire Banco BPM, citing unmet regulatory conditions tied to the government’s use of its “golden power” authority. The announcement, made on July 9, 2025, marked the end of a contentious 14-month takeover attempt that faced resistance from both Banco BPM’s board and Prime Minister Giorgia Meloni’s administration. UniCredit accused the government of impeding the deal through restrictive terms imposed under the golden power mechanism, which grants Italian authorities the right to intervene in strategic sectors like banking [1].

The bank’s board emphasized that the withdrawal followed the failure to secure necessary approvals, particularly those requiring UniCredit to maintain loan levels in Italy and cease all operations in Russia. These conditions, introduced by the government in April 2024, were deemed incompatible with the merger’s strategic value. The European Commission had previously flagged the golden power provisions as potentially violating EU law, yet the Italian government maintained its stance, seeking to preserve Banco BPM’s independence to align with its broader plan to consolidate Monte dei Paschi di Siena (MPS) with the third-largest bank to form a third national banking group [2].

The decision to withdraw the bid comes amid a regulatory and legal tug-of-war. In June 2025, the European Commission had approved the merger conditional on UniCredit divesting 209 branches to address competition concerns. However, the government’s ongoing intervention—exemplified by the imposition of four restrictive conditions in April—created uncertainty. A July 2025 ruling by Rome’s Administrative Court (TAR) partially invalidated two of these conditions, yet the remaining restrictions proved insurmountable. Consob, Italy’s financial regulator, had also suspended the offer for 30 days in late June, citing “uncertainty” around the process [1].

UniCredit CEO Andrea Orcel described the outcome as a “missed opportunity” for BPM shareholders, arguing that the government’s actions prevented meaningful dialogue about the transaction’s benefits. The bank highlighted that the prolonged standoff deprived shareholders of a comprehensive understanding of the combined entity’s potential. Banco BPM, which had rejected the offer as insufficient, maintained that the bid was “hostile” and opposed by its board, though the company did not publicly comment on the withdrawal [1].

The failed deal reflects broader tensions between corporate consolidation and regulatory caution in the Italian banking sector. This marks the second major merger attempt by UniCredit that has collapsed due to political opposition; in 2021, the bank withdrew its bid for MPS after similar disagreements over terms [5]. Analysts suggest that UniCredit’s strategy of pursuing large-scale acquisitions to enhance market share and efficiency remains at odds with the government’s preference for preserving regional banking structures as pillars of the domestic economy.

Financially, the withdrawal coincided with a revised profit outlook from UniCredit. The bank announced an upward revision of its annual earnings forecast, attributing the change to cost synergies and capital reallocation toward international markets, particularly in Central and Eastern Europe. A surprise 14% jump in June 2025 quarterly earnings—driven by improved loan growth and risk management—was cited as a catalyst for the revised guidance [3].

The outcome leaves both institutions navigating uncertain futures. Banco BPM, now without a takeover prospect, faces renewed scrutiny from its board and shareholders over governance and capital efficiency. Meanwhile, UniCredit’s pivot toward organic growth and international expansion underscores the challenges of balancing regulatory constraints with strategic ambitions in a fragmented European banking landscape.

Sources:

[1] [UniCredit drops bid for Banco BPM blaming Italy's government](https://www.reuters.com/business/finance/unicredit-drops-bid-banco-bpm-blaming-italys-government-2025-07-22/)

[2] [Italy's UniCredit Withdraws Offer For Banco BPM](https://www.barrons.com/news/italy-s-unicredit-says-withdraws-offer-for-banco-bpm-3b7ed944)

[3] [UniCredit raises profit outlook after dropping Banco BPM bid](https://www.reuters.com/world/europe/unicredit-raises-profit-outlook-after-dropping-banco-bpm-bid-2025-07-23/)

[4] [UniCredit posts surprise profit jump, drops Banco BPM bid](https://www.rte.ie/news/business/2025/0723/1524873-unicredit-quarterly-results/)

[5] [UniCredit boosts outlook after walking away from Banco BPM](https://uk.finance.yahoo.com/news/unicredit-boosts-outlook-walking-away-100559816.html)