UniCredit’s chief executive Andrea Orcel in an interview with Italian daily La Repubblica, indicated that the bank is likely to abandon its proposed acquisition of smaller rival Banco BPM, as reported by Reuters.
Orcel highlighted ongoing challenges posed by the Italian government’s “golden power” conditions and court appeals as significant barriers to the deal.
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“But if we don’t manage to resolve (the problems), as is probable, we will withdraw,” he stated.
The CEO noted that UniCredit has been working to comply with the terms set by Rome, including the divestment of its Russian activities, a move also urged by the European Central Bank.
“We have done more than was requested by the ECB,” Orcel stated, adding that no other bank had reduced its Russian activities as extensively as UniCredit.
However, finding a buyer for these assets acceptable to both Russia and Western authorities has proven difficult.
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By GlobalDataOrcel also confirmed that the bank had earmarked capital to cover potential losses if the Russian assets were to be nationalised.
Despite the potential setback, Orcel remained optimistic about UniCredit’s prospects saying: “Our future is very bright with or without M&A.”
He refrained from commenting on the ongoing investigation during the interview.
This comes on the heels of European Commission’s approval of the proposed acquisition under the EU Merger Regulation, subject to UniCredit divesting 209 branches in areas where competition concerns were identified.
However, the Italian competition authority’s request to assess the merger under national competition law was denied by the Commission.
The Commission’s investigation concluded that at the local level, the transaction could potentially harm competition in the deposits and loans markets for retail consumers and SMEs banking services.
Conversely, at the regional level, no competition concerns were raised for LCCs banking services, as the market would still feature several well-established competitors’ post-transaction.
Furthermore, the Commission found no evidence that the transaction would increase the risk of coordination in the Italian banking market, considering the market’s fragmented nature, the low transparency in consumer pricing, and the limited monitoring of market behaviour by competitors.
Earlier this month, Commission revealed that it will not initiate an in-depth investigation into the deal.
