Jun 20, 07:22 AM

UniCredit Signals It Will Abandon €14 Billion Banco BPM Bid

UniCredit Chief Executive Officer Andrea Orcel said the Italian lender is "likely" to withdraw its €14.2 billion all-share bid for rival Banco BPM, despite receiving European Commission antitrust clearance only a day earlier. In an interview with La Repubblica published Friday, Orcel warned that government-imposed “golden power” conditions meant to protect national security make it improbable the transaction can proceed without exposing UniCredit to significant penalties. The offer, suspended since May after UniCredit challenged the conditions in court, is scheduled to resume on 23 June. A ruling from the Regional Administrative Tribunal is expected on 9 July, and the bid is due to lapse on 23 July. Orcel, who previously put the odds of success at 20 percent, reiterated that the bank’s strategy can deliver returns above 15 percent even without large mergers and acquisitions. Market reaction was muted: by mid-morning trading Banco BPM shares were up about 1.4 percent while UniCredit gained 2.3 percent. Orcel added that UniCredit will trim its 6.7 percent holding in insurer Generali "in due time" and said the bank’s risk division continues to stress-test all equity stakes. The comments mark the strongest signal yet that UniCredit is ready to abandon a deal that had drawn political resistance in Italy and scrutiny in Germany, where the bank has also built positions in Commerzbank. Orcel concluded that UniCredit’s capital could instead be returned to shareholders if suitable acquisitions fail to materialise.