Italy clears UniCredit's bid for Banco BPM with prescriptions

By Giuseppe Fonte and Valentina Za

ROME (Reuters) -Italy has cleared with conditions UniCredit's takeover bid for rival Banco BPM, with sources saying a speedier exit from Russia is among demands set by Rome for the bank led by CEO Andrea Orcel.

UniCredit's presence in Russia is a bone of contention also with the European Central Bank, which last year ordered the Italian lender to hasten its disentanglement.

UniCredit said late on Friday it would take time to assess the implications of the government's decision, including on the BPM deal, "liaising as appropriate with the competent authorities".

"The offer is approved with prescriptions, the merit of which is not clear. UniCredit will be taking time to assess the viability and impact of the prescriptions," it said.

UniCredit plans to launch on April 28 its 14 billion-euro ($16 billion) all-share bid for BPM, which is one of many hostile takeover bids rocking Italian banking.

The government of conservative Prime Minister Giorgia Meloni vetted the BPM deal using special 'golden powers' that allow it to block or set conditions on foreign and domestic takeovers in sectors such as energy, telecommunications and banking.

The scope of such rules in Italy for banking deals is under scrutiny by the European Commission.

The government said in a statement it was protecting strategic interests for national security in setting the prescriptions.

Foreign Minister Antonio Tajani campaigned against imposing them because it could expose the government to legal risks, one source with knowledge of the matter said, signalling a split in the government.

Other demands are likely to focus on bank branches to ensure services to customers and indirectly preserve jobs should the takeover be finalised, a second source said.

UniCredit is among only a handful of international banks that failed to leave Russia after the Ukraine war broke out in 2022, with Orcel saying he refused to damage shareholders by foregoing a fair price for the assets.

The bank has accelerated the reduction of its Russian exposure to meet ECB demands.

In an indirect reference to Orcel on Thursday, Economy Minister Giancarlo Giorgetti said bankers were rightly concerned with profits, but ministers had to act in the general interest.

DROP THE BID?

By swooping on Banco BPM in November, Orcel derailed the government's plans to promote a tie-up between BPM and state-backed Monte dei Paschi di Siena. MPS has since launched an offer for Mediobanca.

UniCredit has the right to drop the BPM acquisition because Banco has raised the price of its own bid for fund manager Anima Holding and clinched the purchase despite being denied favourable regulatory capital treatment.

UniCredit plans to wait until the very end, possibly as late as June 30, just before the payment date, to decide what to do. Before the latest bid, UniCredit had twice been close to moving on Banco BPM since Orcel took over in 2021, but he decided against the deal. Bankers do not rule out he could walk away a third time.

Orcel has also built stakes in insurer Generali and in German rival Commerzbank, saying these are only financial investments, though he has called for a merger with Commerzbank.

A shareholder vote on April 24 at Generali to pick the CEO amid a boardroom battle could shed some light on Orcel's strategy in relation to the insurer.

($1 = 0.8780 euros)

(Editing by Alison Williams, Chris Reese, Kirsten Donovan)