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An Italian court has confirmed that lender UniCredit must comply with a government demand to exit from Russia if it wishes to finish the takeover of rival Banco BPM, in a blow to chief executive Andrea Orcel.
The request by Giorgia Meloni’s government is “totally legitimate” and “there could be little question concerning the fact it’s proper”, the court ruled.
Nevertheless it partially upheld an appeal by UniCredit on other measures demanded by Rome as conditions of the takeover.
Within the landmark ruling, published on Saturday, government prescriptions on BPM’s post-merger loan-to-deposit ratio and the upkeep of the 2 lenders’ project finance portfolios in Italy were struck down.
It’s the primary time the executive court has ruled against any requirements imposed by the federal government on a strategic takeover deal, and the judges’ decision cancels the present text of the federal government’s decree altogether.
Orcel had previously warned that the deal could collapse if the federal government didn’t chill out its requirements.
It was not immediately clear whether either side within the case would appeal further, or whether the federal government would redraft its decree to take into consideration the judges’ decision.
That leaves the deal in limbo. The BPM offer period, which has already been prolonged once because of the court case, ends on July 23. If the federal government doesn’t rewrite its decree, UniCredit could ask for the deadline to be prolonged, or one in all the parties could appeal against the court’s decision; the deadline may be suspended by the regulator.
BPM said in a press release it was pleased with the final result of the appeal and called on UniCredit to “make clear its intentions” on the takeover.
UniCredit declined to comment on the choice. UniCredit’s board is because of meet in the approaching days, in response to people accustomed to the matter.
UniCredit is Italy’s second-largest lender. It launched concurrent takeover bids for BPM and Germany’s Commerzbank last 12 months.
It has significantly reduced its exposure to Russia for the reason that country’s full-scale invasion of Ukraine in 2022 but stays one in all two European lenders to operate an area subsidiary.
Orcel has up to now refused to exit the country altogether to avoid incurring a balance sheet hit. The exit would need to be authorised by Russian authorities.