UniCredit likely to withdraw 14 billion euro bid for Banco BPM

UniCredit SpA is likely to withdraw its bid for smaller rival Banco BPM, the Italian bank's chief executive Andrea Orcel said on Friday, Reuters reported, according to Agerpres.

In April, UniCredit secured approval from the European Central Bank (ECB) for its takeover of Banco BPM, a deal estimated at 14 billion euros.

In an interview with Italian newspaper La Repubblica, Orcel said UniCredit would continue to try to overcome the Italian government's obstacles, according to the conditions set by the so-called "golden power". "But if we fail to resolve the problems, which is highly likely, we will withdraw," Orcel said. He said UniCredit had done everything possible to meet the conditions set by the authorities in Rome to complete the transaction, including giving up its activities in Russia, something that the European Central Bank also requested, but this is not an easy task.

"We have done more than the ECB asked for,” said the UniCredit boss, adding that no other bank had reduced its activities in Russia as much as UniCredit, and none of the offers from buyers were acceptable "neither from Russia nor from the West.”

UniCredit has set aside capital to cover potential losses if its assets in Russia are nationalized, Orcel explained.

A bid for another UniCredit takeover target - Commerzbank AG - was rejected by the Berlin government and the German bank, and Orcel said that for now the Italian group would remain an investor and would closely follow "Commerzbank's transformation model.”

Meanwhile, UniCredit will continue to outperform the rest of the banking sector in terms of mergers and acquisitions (M&A). "Our future is bright, with and without M&A,” Orcel concluded.

The takeover bid for Banco BPM is one of a series of hostile takeover bids currently roiling Italy's banking sector, which underwent a painful restructuring during the 2008-2012 crisis and has recently posted record profits thanks to high interest rates. Under CEO Andrea Orcel, a veteran of the M&A segment, UniCredit has adopted an aggressive expansion strategy, acquiring a 28% stake in German group Commerbank and launching a takeover bid for Italian rival Banco BPM. It has also acquired a 6.7% stake in Generali SpA, Italy's largest insurance company.