UniCredit Scraps Bid for BPM Following Government Resistance

UniCredit Withdraws Banco BPM Bid Amidst Italian Government Interference

UniCredit has officially pulled its offer to acquire smaller rival Banco BPM, citing insurmountable conditions imposed by Giorgia Meloni’s government. The decision comes shortly after the European commission publicly criticized Italy’s intervention in the proposed merger.In a statement released Tuesday, the Italian lender explained that the conditions required for the government’s “golden power” authorization had not been met. The “golden power” mechanism, designed to scrutinize foreign takeovers of strategic assets, grants the Italian state the authority to enforce requirements on transactions deemed vital for national security.

UniCredit described the deal’s collapse as a “missed opportunity” for its shareholders and the broader Italian economy. Andrea Orcel, UniCredit’s chief executive, attributed the withdrawal to “continued uncertainty” surrounding the application of the golden power rules, stating that they provided no benefit to the bank or its investors.

The Italian government had initially stipulated several conditions for the deal in May as part of its extensive use of the golden power. while an Italian court afterward invalidated two of these conditions, two others – including a demand for UniCredit to exit Russia within nine months of the deal’s completion – were upheld.

UniCredit’s decision follows the European Commission’s declaration earlier this month that the government’s interference violated EU market rules. Despite this, Rome has shown no indication of wavering on its imposed conditions, leaving UniCredit unable to proceed wiht the acquisition.

The uncertainty surrounding the deal had already begun to negatively impact Banco BPM’s shareholders, prompting the rival bank to call on UniCredit last week for a clarification of its intentions.

UniCredit’s €10 billion bid for Banco BPM was submitted in November, shortly after the bank had secured a important stake in Germany’s Commerzbank. This move had reportedly taken the Italian government by surprise and was initially rejected by Banco BPM.

Sources indicate that the Italian government had been actively promoting a merger between Banco BPM and Monte dei Paschi di Siena, a bank that the state had rescued in 2009 and nationalized nearly a decade later. Rome’s objective was to establish a third major banking entity to compete with existing giants UniCredit and Intesa Sanpaolo.

UniCredit expressed its frustration, stating in its withdrawal announcement that “the normal offer process has been impacted by the golden power provision insistently advocated for by the leadership of BPM, preventing UniCredit from engaging with BPM shareholders in the way that any normal offer process would allow.”

What were the primary political factors that led to the collapse of the UniCredit-BPM merger?

The Failed Merger: A Timeline of Events

The proposed merger between unicredit and Banca Popolare di Milano (BPM) collapsed in 2020 after facing critically important opposition from the Italian government. This article details the key events,the reasons behind the government’s resistance,and the implications for both banks and the Italian banking sector. The initial approach, dating back to 2017, aimed to create a stronger, more competitive Italian banking group. Though, political interference ultimately derailed the deal.

Initial Bid and Political Landscape (2017-2019)

UniCredit,under the leadership of CEO Jean-Pierre Mustier,initially explored a potential acquisition of BPM in 2017. The Italian banking sector was,and remains,fragmented,with numerous smaller banks struggling with non-performing loans (NPLs) and profitability. A consolidation was widely seen as necessary.

Key Objectives: The merger aimed to reduce costs, improve capital ratios, and strengthen the combined entity’s position in the competitive European banking market.

Early Hurdles: The initial bid faced scrutiny from the European Central Bank (ECB) and the Italian government, primarily due to concerns about potential job losses and the impact on local communities.

Political Shifts: The rise of populist governments in Italy introduced a new layer of complexity, with increased emphasis on national interests and protectionism.

Government Intervention and Growing Opposition (2019-2020)

As the merger progressed, the Italian government, led by the Five Star Movement and the League, actively voiced it’s opposition. Concerns centered around the potential for UniCredit to restructure BPM, leading to branch closures and job cuts, especially in regions where BPM had a strong presence.

Political Pressure: Government officials publicly criticized the deal, arguing that it would not serve the best interests of Italian citizens.

Shareholder Concerns: Some BPM shareholders also expressed reservations, fearing that the terms of the offer undervalued the bank.

Regulatory Scrutiny: While the ECB didn’t outright block the deal, it raised concerns about the potential impact on competition and financial stability.

The Collapse of the Deal (2020)

In May 2020, unicredit officially withdrew its bid for BPM. The bank cited the “lack of sufficient support from the Italian government” as the primary reason for the decision. This effectively ended years of negotiations and dashed hopes for a major consolidation in the Italian banking sector.

UniCredit’s Statement: The bank emphasized that the political climate made it impossible to secure the necessary approvals for the merger.

BPM’s Response: BPM acknowledged UniCredit’s withdrawal and stated that it would continue to pursue its independent strategy.

Market Reaction: The news sent shockwaves through the Italian financial markets, with shares of both UniCredit and BPM experiencing significant volatility.

Implications for UniCredit and BPM

The failure of the merger had significant consequences for both UniCredit and BPM.

UniCredit’s Strategic Shift

UniCredit was forced to reassess its strategy and focus on organic growth and capital betterment.The bank continued its efforts to reduce its NPL portfolio and improve profitability. In recent news (July 22, 2025), UniCredit has been actively issuing retail bonds, such as a new fixed-rate bond with a 4.50% annual gross rate, to strengthen its financial position. https://www.finanzaonline.com/notizie/unicredit-emette-una-nuova-obbligazione-retail-a-tasso-fisso-del-450-pagato-al-rimborso

Focus on Capital: UniCredit prioritized strengthening its capital base to meet regulatory requirements and support future growth.

NPL Reduction: Continued efforts to reduce non-performing loans remained a key priority.

International Expansion: The bank explored opportunities for expansion in other European markets.

BPM’s Independent Path

BPM was left to navigate the challenges of the Italian banking sector on its own. The bank focused on improving its efficiency and profitability, while also seeking to strengthen its capital position.

Standalone Strategy: BPM reaffirmed its commitment to pursuing an independent strategy focused on serving its local customer base.

Digital Transformation: The bank invested in digital technologies to improve its customer experience and reduce costs.

* NPL management: BPM continued to address its legacy NPL portfolio.

Broader Impact on the Italian Banking Sector

The collapse of the UniCredit-BPM merger highlighted the challenges facing the Italian banking sector and the risks associated with political interference in financial transactions.

Consolidation Challenges

The failed deal underscored the difficulties of achieving