Massimo Tononi, chair of Milan-based Banco BPM, received a call late on Sunday evening from an unexpected caller: Andrea Orcel, chief executive of its crosstown rival UniCredit.
Orcel had picked up the phone to inform Tononi that UniCredit would announce an unsolicited €10.1bn takeover bid for his bank first thing on Monday morning.
The surprise move has propelled Orcel to the centre of Italy’s banking consolidation, and suggests his takeover priorities are in flux after UniCredit’s advances to German lender Commerzbank encountered fierce opposition in recent months.
Orcel on Monday told analysts UniCredit could not miss out on looming mergers and acquisitions in its home market. “We cannot remain absent from that move,” he said.
Only two weeks ago, BPM snapped up a 5 per cent stake in once-ailing Monte dei Paschi di Siena from the Italian state, firing the starting gun on a consolidation process that the government of Prime Minister Giorgia Meloni had hoped would create the country’s third-largest banking group after Intesa Sanpaolo and UniCredit.
That plan would be scuppered, however, if Orcel succeeds in his swoop on BPM, a move that has been met with irritation in Rome.
“I wouldn’t want to think that someone is trying to stop [a BPM and MPS union],” said deputy prime minister Matteo Salvini 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.”
Italy’s finance minister Giancarlo Giorgetti also told lawmakers the government had been informed of the bid but had “not agreed” to it. He suggested the state might use its golden power rules, which give the government a say over certain strategic deals, to impose conditions on UniCredit.
“As [military strategist] Carl von Clausewitz said, the safest way to lose the war is to engage on two fronts, then who knows,” Giorgetti told lawmakers.
Orcel responded on Italy’s evening television news that the government’s reaction was “to be expected and it’s correct to evaluate”.
“The deal has been awaited for years . . . but deals that touch the banking system are always complex,” he said.
Once undermined by fragmentation and plagued by non-performing loans, Italian lenders have in recent years shored up their balance sheets and consolidated domestically.
After talks to take over ailing lender MPS broke down between UniCredit and Italy’s finance ministry in 2021, the government turned to BPM in the hope it might eventually play a part in MPS’s privatisation.
BPM, now the country’s third-largest lender, was considered the potential aggregator of both MPS — which Italy is in the process of privatising — and its Modena-based rival BPER.
Rony Hamaui, a professor at Milan’s Università Cattolica, said BPM “lacked the courage to [play buyer] and now they must counterattack, which isn’t easy”.
“This will surely represent a step back in the construction of a third banking group in the country and this will be a problem for Italy’s government.”
BPM declined to comment on UniCredit’s offer, which will be discussed by its board of directors at a pre-scheduled meeting on Tuesday.
BPM chief executive Giuseppe Castagna, who has been at the head of the bank since 2017, has long championed a standalone strategy, pushing back against suggestions it should buy MPS or BPER.
Earlier this year he said in an interview with Italian daily Il Sole 24 Ore that BPM would “continue growing on its own”. He also forecast that domestic M&A “would be on standby for at least 18 to 24 months”.
Although Orcel’s bid for BPM may have been influenced by a fear of missing out, it also comes as momentum for a potential German deal has faltered.
Although UniCredit has long regarded Commerzbank as a potential takeover target — and has a presence in Germany through its HypoVereinsbank subsidiary — its emergence as a major shareholder in September triggered a political backlash.
Orcel’s attempt to lift UniCredit’s holding to 21 per cent is stuck in a months-long regulatory process, while ministers in Berlin have become increasingly vocal about their opposition as the country heads into crunch elections in February.
Germany’s powerful 16 regional states have also united against the Italian lender’s takeover of Commerzbank, making it more challenging for an incoming government to back the deal.
In a recent meeting, the chiefs of staff of the chancelleries of the 16 states agreed they were “concerned” about developments regarding Commerzbank, according to minutes seen by the Financial Times.
They called on the federal government in Berlin to “actively use its influence to ensure that German credit institutions continue to remain independent as important providers of capital for the German economy”.
Then on Sunday, Germany’s caretaker finance minister Jörg Kukies went the furthest yet, saying he expected Orcel to abandon a bid for Commerzbank.
“We have a very critical stance on this, and the head of UniCredit has said he does not want to ignore the criticism of the German government, so I expect that he won’t do it,” he told public broadcaster ARD.
Orcel on Monday said his approach for BPM had no bearing on UniCredit’s stake in Commerzbank.
But his comments also acknowledged the possibility that there was no deal to be done for the German lender, and the holding could remain a financial investment — albeit one with the advantage of blocking any rival suitor from taking a run at Commerzbank.
The Commerzbank stake was “an investment for now, we can sit on it for a while”, the former Merrill Lynch and UBS dealmaker said. UniCredit could not complete two large acquisitions at once, Orcel acknowledged. “We’re never going to integrate two banks at the same time.”
However, Orcel left open the possibility of playing a long game at Commerzbank. The derivative positions built to lift the stake in the German lender from 9 per cent to 21 per cent will not expire until 2026 — and could be extended. Meanwhile, the full integration of BPM could be largely completed within 12 months, the UniCredit chief estimated.
Johann Scholtz, an analyst at Morningstar, said UniCredit’s new takeover target made more strategic sense. “We are surprised that UniCredit is continuing with the Commerzbank takeover,” he wrote on Monday.
As even Orcel conceded, however, the BPM bid reduces “the need to close on the other side”.
Additional reporting by Laura Pitel in Berlin