BRUSSELS — Italian Prime Minister Giorgia Meloni achieved a significant, albeit limited, victory on Saturday as a prominent court endorsed her administration’s efforts to shape a contentious banking merger.
Court ruling details and implications
A regional administrative court, TAR Lazio, determined that the Italian government was partially justified in imposing restrictions on UniCredit’s bid for its competitor BPM, citing national security regulations. However, the court mandated that two specific conditions be re-evaluated by the government.
This ruling leaves numerous uncertainties in a complex political struggle that involves Italy’s second-largest bank, the national government, and the European Union’s governing body.
Earlier this year, Italy utilized its foreign investment screening capabilities, often referred to as “golden power,” to enforce stringent conditions on UniCredit’s attempt to acquire BPM. In response, UniCredit filed an appeal, arguing that these conditions were excessively burdensome and effectively hindered the merger.
On Saturday, the court instructed the government to reassess two of the stipulations related to the loan-to-deposit ratio and project financing. However, it did not make a ruling on two other pivotal conditions regarding securities and UniCredit’s exit from the Russian market.
“This ruling largely legitimizes the use and structure of golden power rules, recognizing that economic security is part of national security,” a government official remarked.
Political ramifications and EU involvement
The Italian government’s decision to employ foreign investment screening rules to obstruct a merger that is unpopular with Meloni’s administration has drawn scrutiny in Brussels. The European Commission has initiated two separate investigations into the situation.
On June 19, the Commission’s competition directorate approved UniCredit’s merger with certain conditions, signaling its readiness to caution Italy against encroaching upon Brussels’ exclusive authority over significant merger approvals.
As the situation continues to unfold, the future of UniCredit’s proposal for BPM hangs in the balance, with the formal offer set to lapse on July 23. UniCredit has yet to issue a comment regarding the recent court decision.