Rome seeks ways to counter UniCredit’s takeover bid for BPM

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Giorgia Meloni’s government is examining ways to counter UniCredit’s takeover bid for smaller Italian rival Banco BPM, which has frustrated Rome’s own designs for banking consolidation, according to two people with knowledge of the plans.

Options include an emergency decree to circumvent the so-called passivity rule, which blocks targets of a bid from making decisions that might affect the takeover approach.

Since UniCredit announced its €10.1bn offer on Monday, such a rule means that Milan-based BPM is barred for six months from increasing its stake in state-backed Monte dei Paschi di Siena which the government wants to privatise. It is also forbidden to amend the terms of its own €1.3bn offer to buy Italian asset manager Anima.

Finance minister Giancarlo Giorgetti has also threatened to use the government’s so-called golden powers to impose conditions on UniCredit’s takeover of BPM. Such powers, which have rarely been used, are designed to block foreign takeovers of strategically important domestic assets.

“It’s like leaping back 50 years with the government butting into domestic banking deals or seeking to block them if they aren’t of their liking,” said one top Italian banking executive. 

The move by UniCredit chief Andrea Orcel risks scuppering Rome’s plans to create a larger national banking champion by merging MPS with BPM. After weeks of backdoor negotiations, the government, which sold 5 per cent in MPS to BPM earlier this month as a prelude to further consolidation, would have to go back to square one.

For Meloni’s coalition partner, the rightwing nationalist League party, the irritation goes deeper. BPM is an important lender in the party’s northern stronghold, Italy’s richest and most industrialised regions. League party officials had also been hoping to expand political influence over an enlarged banking group through the merger with MPS, traditionally associated with Italy’s leftwing circles.

“We need banks close to our regions,” said deputy prime minister and League leader Matteo Salvini this week.

While Meloni has refrained from making public comments on UniCredit’s bid — and foreign minister and member of the centre-right Forza Italia party Antonio Tajani said it was not for politicians to interfere — Salvini has voiced his opposition, suggesting that foreign interests were behind Orcel to disrupt MPS’s privatisation.

“Look at UniCredit’s shareholders . . . they are US, French and German, Italians are marginal . . . so a few doubts here are legitimate,” he said. 

Orcel is not new to clashes of sorts: in 2021, the government of then prime minister Mario Draghi spent months locked in negotiations with the former UBS deal banker trying to agree a price tag for MPS.

“Meloni and Giorgetti were confident UniCredit would not have taken on the government again, but that’s how Orcel is . . . good dealmakers are those who aren’t afraid of playing with fire, and he’s playing with fire,” said an Italian official who attended the 2021 talks.

Orcel said this week the government’s lukewarm reaction was to be expected and that it was “correct they evaluate.”

It is the second time in the space of two months that the banker has angered an EU government. In September, UniCredit’s rapid and unexpected stakebuilding in Commerzbank, which Berlin has owned since the financial crisis and is also seeking to privatise, prompted fierce opposition from the main political parties and unions.

Analysts and politicians have questioned whether UniCredit can successfully pursue two complicated takeover bids at once. The Milan lender’s shares are down almost 8 per cent since the Friday before the announcement. Its attempt to increase its stake in Commerzbank to 21 per cent is awaiting regulatory approval and Germany is heading towards snap elections in February.

In Italy, BPM’s board of directors has rejected UniCredit’s offer saying it would lead to thousands of job losses and that it did not reflect the bank’s value. “Price is an issue and the fact that the premium is almost nil is peculiar,” said Roberto Freddi, head of Europe Financial Services at consultancy Kearney.

“Commercial banking is a dull, highly regulated pro-government business, you can’t go about it like a gunslinger,” said another senior banking executive.