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Executive over-reach is a theme these days. Investors in US securities — currently grappling with President Donald Trump’s on-off assault on the Federal Reserve’s independence — can vouch for its impact.
The latest to join the meddling crowd is Italy’s Prime Minister Giorgia Meloni, who has invoked “golden power” rules — usually employed to block foreign takeovers of strategic companies — to hobble lender UniCredit’s €14bn bid for smaller rival BPM. The offer, due to be extended to BPM’s shareholders from April 28, is now in limbo as UniCredit seeks to clarify the conditions the government has imposed.
The geopolitical concerns here are not easy to grasp. Despite having offices around the world and international shareholders, UniCredit is a Milan-headquartered group. Italy wants the complete cessation of its activities in Russia within nine months. It also wants to ensure the spigots stay open for Italian companies and clients, seeking a promise that UniCredit will not reduce BPM’s or its own loan to deposit ratio for five years.
Finally, BPM’s newly acquired asset manager Anima cannot sell down its Italian securities. Unless Anima’s clients are enthusiastic Italy bulls, they should presumably be prepared to hoof it.
That such bludgeoning is not exactly helpful to Italy’s capital markets is, presumably, clear to Meloni. So the prime minister’s real goal is the subject of much speculation. Andrea Orcel, UniCredit’s acquisitive boss, did upset government plans to slam BPM together with Tuscan bank Monte dei Paschi di Siena to create a third large banking group. But, with MPS pursuing new quarry Mediobanca, that option is no longer available. If it does not end up merging with UniCredit, BPM would remain a subscale lender with a major French shareholder in Crédit Agricole.
Another idea is that Meloni may be trying to heap pressure on UniCredit to help government-backed local investors gain control of insurer Generali, itself at the centre of a battle between shareholders. How the bank votes its 5 per cent stake at the Generali AGM on Thursday will provide clues as to whether it will seek to do battle or tug its forelock.
Distasteful as this all is for proponents of free markets, its repercussions are likely to be relatively contained. For one thing, government influence in strategic sectors is hardly unheard of — although it is usually exercised via a combination of smiles, frowns and raised eyebrows. And while increased uncertainty should, by rights, raise the cost of capital for Italian businesses, everything is relative. Meloni’s meddling is, unfortunately, in line with the times.
camilla.palladino@ft.com
