BPM’s two branches: the bank of failed marriages

In the great game of banking Risk, and whilst we wait to see whether Luigi Lovaglio’s approach or that of Intesa Sanpaolo will prevail regarding the future of MPS, there is another important issue that is very close to Giancarlo Giorgetti’s heart. This issue concerns Banco BPM, the bank with many suitors and failed mergers. Unicredit wanted it, but withdrew its offer after hitting a brick wall of government restrictions on the ‘golden power’. MPS is now pursuing it, having included BPM in its strategy to defend itself against Intesa’s takeover bid. Even before that, Banco BPM had attempted a merger with Siena, which subsequently fell through in the face of opposition from Crédit Agricole, BPM’s largest shareholder with a 29.3 per cent stake. This splendid isolation continues, with the guardian of independence speaking French and showing no intention of backing down. Today, however, the situation has returned to square one, but with the roles reversed. Unicredit has settled its dispute with the government, withdrawing its appeal to the Council of State regarding the restrictions on the ‘golden power’.

The thaw in relations with the Ministry of the Economy has reopened a political channel. Back in June, Giorgetti had already noted that Unicredit might attempt the deal again. Now, according to several financial operators familiar with the matter, the Ministry of the Economy and Finance (MEF) had asked Andrea Orcel before the summer to help prevent BPM from falling entirely under Parisian control. The same sources describe a move by Unicredit as imminent, partly to thwart any French ambitions. The paradox is clear: in order to prevent an Italian takeover, efforts were made that helped to strengthen the French shareholder. Now the focus has returned to the very Italian bank that was rejected a year ago in an attempt to limit its expansion. The rumours have already had an impact on the market: on 21 September, BPM’s share price rose by 4.3 per cent, whilst rumours were circulating about a possible joint initiative by Unicredit and Agricole. Market participants are exploring various options. One possible scenario could be an offer by UniCredit for the entire bank, accompanied by a commitment to sell part of the network to Crédit Agricole: branches, but also deposits, loans and customer relationships. Another scenario could reverse the roles, with the French acting as promoters of the deal and UniCredit taking over an agreed portion of the business. The division would therefore be industrial in nature, not simply a matter of joint ownership. Which assets, how many branches, at what price: all this would remain to be negotiated. The future of asset management and safeguards for employees, customers and financed businesses would also need to be defined. But the idea that UniCredit and Agricole might reach an agreement to divide up BPM’s assets is no longer mere financial fantasy. The question, then, is who will call the shots. Whoever makes the first move will be able to try to set the price of the merger and that of the split. The game remains wide open. But the more astute observers will not fail to notice the shift in criteria. Yesterday, the government regarded it as a setback for Italy if Unicredit were to buy the whole of BPM. Among the conditions imposed under the ‘golden power’ were also the bank’s withdrawal from Russia. Since then, Unicredit has drastically reduced its exposure to Russia and has begun selling off a large part of its local operations, although the withdrawal is not yet complete and the deal is due to be finalised in 2027. Today, the same government might regard it as a success if Unicredit were to manage to acquire even just a part of BPM. Banking patriotism, having once built walls, is now discovering the advantages of division. Will BPM’s splendid and profitable isolation last much longer? It remains to be seen.