Italian Government Blocks UniCredit’s Bid for Banco BPM Over Russia-Linked Compliance Fears

The Italian government has halted UniCredit’s €13 billion ($15 billion) all-share takeover bid for Banco BPM, citing concerns over anti-money laundering (AML) risks associated with the bank’s operations in Russia. The move effectively puts on ice a deal that would have created one of Europe’s largest banking groups, combining Italy’s second and third biggest retail lenders.

In a statement issued today, UniCredit confirmed that the government had imposed conditions that make it impossible to move forward with the proposed acquisition at this stage. “UniCredit has promptly responded to the authorities with its views on the decree and awaits feedback. Until then, UniCredit is not in a position to take any conclusive decision on the way forward regarding Banco BPM,” the bank said.

The intervention comes amid mounting pressure from the European Central Bank (ECB), which has ordered UniCredit to scale back its exposure in Russia. The ECB has laid out strict deadlines for the bank to reduce its operations in the country—a process UniCredit insists it is actively undertaking.

“[UniCredit] is committed to continuing to compress its presence in Russia,” the bank stated, adding that its Russian operations are “already down 90% in the last three years, in alignment with the ECB decision.”

The Italian government’s concerns reportedly revolve around UniCredit’s capacity to manage compliance and AML risks related to its Russian transactions. According to Reuters, officials are worried the bank “cannot fully assess and manage compliance and anti-money laundering risks linked to Russia business’ transactions.”

A court recently upheld the ECB’s authority on the matter, ruling in favor of the central bank’s mandate to oversee and direct UniCredit’s de-risking process in Russia. In its ruling, the court supported the ECB’s warnings about the dangers of remaining in the Russian market, which include potential involvement in terrorism financing, money laundering, and violations of international sanctions.

Among the issues cited by the ECB are the lack of access to client information held by UniCredit’s Russian subsidiaries and limitations on inspecting the bank’s offices in the region—factors that hinder robust compliance checks.

UniCredit said the constraints imposed by the government pertain to “constraints” on the future combined business, and further clarified that the conditions would include limits on “UniCredit’s activities in Russia.”

Adding another layer of complexity to the saga, Banco BPM has rejected the bid as hostile. Moreover, market analysts have noted that the market currently values BPM at approximately €1.1 billion more than UniCredit’s offer, further undermining the likelihood of a successful deal under current terms.

By fLEXI tEAM