(Bloomberg) -- UniCredit SpA’s surprise bid for Banco BPM SpA has left Prime Minister Giorgia Meloni’s government struggling to work out if its plans to create Italy’s third major banking group are now defunct.
Several officials contacted by Bloomberg expressed bafflement at Chief Executive Officer Andrea Orcel’s unexpected move to offer €10 billion ($10.5 billion) in an all-share bid for its smaller domestic rival, questioning what his motives for such a transaction might be.
Most perplexing for them is why the UniCredit boss wants to launch another hostile takeover battle while he is also pursuing an acquisition of Commerzbank AG, Germany’s second-biggest lender.
Considering Meloni’s muscular and engaged approach until now toward interactions with Italy’s major companies, Orcel’s audacity could be perceived as a challenge to that authority.
For officials in Rome, the most pressing issue raised by his move is that such a takeover may scuttle their strategy to create Italy’s third-biggest bank after UniCredit and Intesa Sanpaolo SpA. Banco BPM is buying a stake in lender Banca Monte dei Paschi di Siena SpA from the government as part of that deal.
“I wouldn’t want to think that someone is trying to stop” that union, Deputy Prime Minister and League party leader Matteo Salvini said on Monday. “I never liked concentrations and monopolies, as far as I knew UniCredit wanted to grow in Germany. I don’t know why they’ve changed their mind,” he added.
UniCredit informed officials about its takeover bid shortly before announcing it, according to Finance Minister Giancarlo Giorgetti, who added that the offer wasn’t made in agreement with the government.
Italy can wield special vetoes on deals, he observed in remarks to reporters. So-called “golden-power” rules give the government options, but it will only make any assessments about a transaction when UniCredit requests the go-ahead, Giorgetti said.
Officials are puzzling over the implications. One person, speaking on condition of anonymity, said the creation of a third banking group is still possible, with Monte Paschi and Unipol Gruppo SpA at its core instead of Banco BPM.
Another person noted that it’s not a negative for the government if Orcel wants to create a stronger Italian group together with Banco BPM.
In a call with analysts, Orcel said his bank’s interest in Banco BPM “shouldn’t come as a surprise” and that his bank couldn’t be “absent” from national consolidation in the sector. He used similar language in September with regard to building up a stake in Commerzbank.
Banco BPM, which has almost €200 billion of assets, has long been seen as a target for UniCredit to expand in the rich Lombardy region and add lucrative segments to its business, according to analysts.
UniCredit has built up its Commerzbank holding with a view to making a full acquisition of that German rival. Politicians there have reacted with dismay, while the bank itself is resisting any takeover. That situation has now been put on hold pending the outcome of federal elections early next year.
(Updates with Giorgetti in seventh paragraph)
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