UniCredit adjusts optimistic view following termination of Banco BPM acquisition proposal
UniCredit, the Italian banking giant, has announced its decision to withdraw its takeover bid for Banco BPM due to government restrictions, specifically the "golden power" condition that allows the Italian government to intervene in strategic deals [1][3]. This decision comes after months of conflict involving UniCredit, Banco BPM, and the Italian government.
Following the withdrawal, UniCredit has raised its net income outlook for 2025 to €10.5 billion, up from the previous expectation of €9.3 billion. It also projects 2025 net revenue to exceed €23.5 billion [2][4]. This revised outlook reflects a positive view on the bank’s standalone performance after ending the takeover attempt. The bank described 2025 as potentially its "best year ever," boosted by one-off items and future earnings enhancements through insurance integration and equity consolidations.
In addition to these plans, UniCredit has announced a €3.6 billion share buyback program [2]. This move is expected to benefit shareholders and further strengthen the bank's capital position.
The withdrawal of the bid has also led to a significant shift in the stock market. UniCredit shares rose by 4.6% on the Milan stock exchange following the profit announcement, while Banco BPM shares fell as much as 4.6% to 9.82 euros [1][3].
Despite the progress made in talks, a final resolution would have extended beyond the allowed offer period, leading UniCredit's board to decide to drop the bid. The European Commission has warned Italy that the "golden power" provision is in potential violation of EU law, and the Italian government's financial market regulator, Consob, suspended the bid for 30 days due to a "situation of uncertainty" around the offer [1][5].
CEO of UniCredit, Jean-Pierre Orcel, has expressed the need for more clarity on what is allowable with such transactions in EU countries. He also hopes the debate between the EU and national governments leads to a resolution on banking union, advocating for a stronger European banking union [6].
UniCredit has also made significant strides in reducing its exposure in Russia, already ahead of its targets and those of the European Central Bank (ECB) in this regard [1]. Excluding one-off items, UniCredit's net profit stood at 2.9 billion euros, up 8%, for the second quarter [7]. The bank posted a net profit of 3.3 billion euros for the second quarter, a nearly 25% rise from the previous year [7].
In summary, UniCredit's decision to withdraw its bid for Banco BPM marks a significant turning point for the bank. With a revised positive outlook for 2025 and plans for a share buyback program, UniCredit is focusing on improved standalone earnings and shareholder returns. The ongoing debate about the "golden power" provision and the need for a stronger European banking union remains a key issue in the European financial landscape.
| Aspect | Details | |----------------------------|----------------------------------------------------------------| | Reason for withdrawal | Failure to secure government "golden power" authorization | | Impact on 2025 net income | Raised outlook to €10.5 billion (from €9.3 billion) | | Impact on 2025 net revenue | Expected to exceed €23.5 billion | | Other plans | €3.6 billion share buyback program announced | | Progress in reducing exposure in Russia | Ahead of targets and those of the ECB | | Net profit for Q2 | 3.3 billion euros, up 25% from the previous year | | Suspension of the bid | Consob suspended the bid for 30 days due to a "situation of uncertainty" | | Need for clarity | Orcel advocates for more clarity on what is allowable with such transactions in EU countries | | Desired resolution | Orcel hopes the debate between the EU and national governments leads to a resolution on banking union |
- UniCredit, originally aiming for a stronger presence in Europe, has shifted its focus to its standalone performance and shareholder returns, as it withdraws the takeover bid for Banco BPM.
- The Italian banking giant, now planning a significant €3.6 billion share buyback program, is advancing its financial standing even as it navigates complexities in the European business and finance landscape, particularly with regards to the "golden power" provision.
