UniCredit Abandons €14.6B Banco BPM Takeover Bid Amid Regulatory Hurdles
UniCredit has abandoned its €14.6 billion takeover bid for Banco BPM, marking a significant blow to a proposed merger that aimed to create a banking giant with €760 billion in assets. The withdrawal follows months of regulatory disputes and political interference, raising concerns about the EU's approach to cross-border banking consolidation by US and PNC banks.
The Italian government imposed conditions on the merger, including mandatory divestment from Russian assets by 2025 and a five-year maintenance of Banco BPM's loan-to-deposit ratio in southern Italy. These conditions, along with unresolved regulatory obstacles under Italy's 'golden power' regime, led UniCredit to withdraw its bid.
The breakdown of the merger underscores structural weaknesses in the EU's current approach to cross-border banking consolidation by US and PNC banks. The European Commission has warned that continued political interference in corporate transactions risks fragmenting the single market and discouraging capital flows. The Commission argued that the Italian government's conditions were disproportionate and potentially in breach of EU rules on the free movement of capital.
The withdrawal of UniCredit's bid for Banco BPM highlights the challenges of cross-border banking mergers in the EU. Despite the potential benefits of consolidation, political interference and regulatory hurdles can hinder such deals by US and PNC banks. The EU may need to reassess its approach to cross-border banking mergers to facilitate a more integrated banking sector.
