2024-11-26 16:48:00
On Tuesday the board of directors of Italy’s third largest bank, Banco BPM, rejected Unicredit’s takeover offer worth ten billion euros. It doesn’t create enough added value for shareholders and executives are also concerned about massive staff cuts across 20,000 employees, the bank said after a meeting. Unicredit’s CEO, Andrea Orcel, must now check whether it is possible to increase its offer and provide job guarantees.
In addition to this resistance at the business level, he also encountered considerable anger from the government in Rome. As often happens, the loudest voice was Matteo Salvini, deputy prime minister and head of the far-right Lega party. On Monday he denied that Unicredit was even an Italian bank. “Today it has little or nothing Italian about it: it is a foreign bank,” he said, even though it is based in Milan, the management is largely Italian and the capital traded in Milan is largely in Italian hands.
He also likened the takeover offer to the creation of a “monopoly” that the central bank had to stop. Since, in his words, the monetary authorities are «among the highest paid managers in Italy, for me and for many savers the question arises: does the Bank of Italy exist? What is he doing? Is he monitoring?” In particular, the European Central Bank (ECB) has a say on this issue.
The Finance Minister controls
More worrying for Unicredit than for Salvini, who always communicates loudly, is the announcement by the Minister of Finance and Economy Giancarlo Giorgetti, Salvini’s party colleague, to examine the acquisition project within the scope of the so-called “Golden Power”. On Monday he underlined that he had not given his consent to Unicredit’s offer. He does not accept the objection that the “Golden Power” legislation was enacted only to ward off unwanted foreign investors in strategic economic areas. The government can also intervene in domestic transactions. And Giorgetti also immediately commented on the issues of business strategy, alluding to the offer for Banco Bpm and Commerzbank: «I quote von Clausewitz: The surest way to lose the war is to fight on two fronts».
The outcome of the government review is currently unclear, as is the position of Prime Minister Giorgia Meloni. In any case, it risks a coalition dispute. In addition to the Fratelli d’Italia party and the League, Forza Italia is the third force in the government alliance. On Monday the party, founded by entrepreneur Silvio Berlusconi, called for moderation from the government, unlike the League.
The government wants a third banking hub
The politicians’ anger can be explained by the fact that their plan to build a third banking hub next to market leaders Intesa Sanpaolo and Unicredit could now be foiled. Because Banco Bpm should be the fulcrum of this hub alongside the oldest bank in the world, Monte dei Paschi di Siena (MPS). BPM has just purchased 5% of MPS and the asset manager Anima, for which Banco BPM has presented a takeover bid, also owns another 4%. Salvini wants to keep the collaboration between BPM and MPS alive. The owner of Unicredit Orcel, however, plans to strengthen his own, the second banking hub, without MPS shares and with BPM.
Interestingly, the Italian construction entrepreneur Francesco Gaetano Caltagirone and the financial holding Delfin of the Del Vecchio family, founders of the eyewear manufacturer Luxottica, each purchased 3.5% of MPS shares with small percentage stakes - in line with the wishes of the government. Caltagirone and Delfin boss Francesco Milleri would have a lot of influence in government circles, they report from Rome. In Milanese financial circles, however, an old fear is resurfacing: that Italian politicians are becoming guardians of the interests of a few investors who exercise a lot of power with few financial resources and thus increase their wealth. Italy’s recent history is full of such examples. Shareholders took a wait-and-see approach on Tuesday; Unicredit and BPM prices remained substantially unchanged.
Interview between Time.news Editor and Financial Expert
Time.news Editor: Thank you for joining us today. We’re delving into the recent developments surrounding Unicredit and Banco BPM. The board of Banco BPM recently rejected Unicredit’s €10 billion takeover offer. What do you believe were the main factors behind that decision?
Financial Expert: Thank you for having me. The decision appears to be rooted in a couple of fundamental concerns. Firstly, the Banco BPM board felt that the offer didn’t provide sufficient added value for their shareholders. In addition, there is the looming issue of potential job cuts—around 20,000 jobs are at stake—which naturally raises alarms among employees and the management alike.
Time.news Editor: There’s a lot of political tension surrounding this deal as well. Matteo Salvini, Italy’s Deputy Prime Minister, expressed significant opposition by questioning Unicredit’s Italian identity. How does this political climate affect the corporate landscape in Italy?
Financial Expert: Political sentiment can heavily influence corporate decisions, especially in cases involving large financial institutions. Salvini’s outburst, branding Unicredit as a “foreign bank” despite its Italian roots, reflects a broader anxiety about national sovereignty in economic matters. This can deter not just Unicredit but other foreign investors as well if they feel that their offers may be met with this level of scrutiny or opposition.
Time.news Editor: And then there’s the matter of “Golden Power” legislation mentioned by Finance Minister Giancarlo Giorgetti. Could you elaborate on how this might impact Unicredit’s future attempts?
Financial Expert: The “Golden Power” legislation essentially gives the government the authority to intervene in strategic economic transactions, particularly when they involve potential threats to national interests. This means that even domestic transactions like this one aren’t safe from government review. It complicates Unicredit’s situation significantly, as the Finance Minister has already indicated he’s not in favor of this acquisition, which could place additional barriers in the way of any future offers.
Time.news Editor: Salvini’s comparison of the takeover to creating a “monopoly” indicates a fear of market concentration. How realistic is this fear, and what might be the broader implications for the banking sector in Italy?
Financial Expert: That concern has validity, especially in the context of an already consolidated banking sector in Italy. Mergers and acquisitions can lead to fewer players in the market, which can stifle innovation and reduce consumer benefits. If the government continues to reject consolidations, it could lead to a more fragmented market, which may not be efficient. However, ensuring a competitive environment is also crucial in ensuring that no single entity holds too much power over consumers.
Time.news Editor: With the political landscape as volatile as you described, what steps should Unicredit’s management consider moving forward?
Financial Expert: Unicredit must navigate this political turbulence carefully. They might need to enhance their offer, not just financially but by providing job guarantees or other assurances that could align better with national interests. Engaging in dialogue with government stakeholders to understand their concerns and potentially finding common ground will also be crucial. Ultimately, they need to demonstrate that their plans would support the broader Italian economy, not threaten it.
Time.news Editor: Seen from this perspective, what does the future hold for the banking sector in Italy? Could we see more government intervention like this in pending acquisitions?
Financial Expert: It’s quite possible. As we’ve seen, the Italian government is willing to intervene when national interests are perceived to be at stake. This sets a precedent for future mergers and acquisitions in the banking sector and beyond. We may witness an era where corporations need to become adept at navigating not just the financial implications of deals but also political landscapes in order to be successful.
Time.news Editor: Thank you for sharing your insights! It seems there’s much at stake for both the banks involved and Italy’s economic fabric itself. We’ll keep an eye on further developments.
Financial Expert: Thank you for having me; it’s a complex scenario, and I look forward to seeing how it unfolds.