The European Commission is preparing a dual-track legal move against Italy’s use of “golden power” measures in banking mergers, escalating a dispute that has already shaped one of the year’s largest proposed transactions.
According to people familiar with the plan, Brussels will open proceedings under single-market rules and merger control and instruct Rome to withdraw the decree that set conditions for UniCredit’s failed bid for Banco BPM. Formal letters are expected by mid-November.
Italy’s “golden power” framework, originally designed to safeguard national interests in sectors such as defence and telecoms, has been applied to banking. In April, the government cleared UniCredit’s €15 billion approach to Banco BPM subject to wide-ranging prescriptions, including an obligation for UniCredit to cease activities in Russia by early 2026 and constraints intended to preserve Banco BPM’s lending capacity, such as limits on the loan-to-deposit ratio for five years.
The Commission’s position, set out in earlier correspondence with Rome, is that Italy’s conditions intrude on powers reserved to EU institutions, restrict competition and risk undermining the principle of bank independence. Supervisory oversight of significant euro-area banks lies with the European Central Bank (ECB), which had cleared the UniCredit-BPM combination at prudential level. Brussels also argues that wide national vetoes could impede the single market for financial services.
UniCredit withdrew its offer on 22 July, citing government intervention. Days earlier, an Italian court struck out some of the government’s conditions but upheld the requirement linked to Russia, and on 29 July the government told Brussels the decree would remain in force despite the deal’s collapse. The Commission now plans to challenge both the specific decree and, separately, the broader use of “golden powers” in banking. If the Commission ultimately finds the conditions unlawful, UniCredit could evaluate a claim for damages; Italy would be entitled to contest any adverse decision before the EU courts.
The dispute forms part of a wider EU effort to enable consolidation in financial services, viewed by policymakers as necessary to deepen the capital markets union and finance green and digital investment. Analysts note that political involvement around contested campaigns in Italy, Germany and Spain has altered the European bank M&A playbook, adding uncertainty for bidders and targets alike. The Commission’s move will therefore be watched beyond Italy, given its potential to delineate the boundary between national prerogatives and EU-level supervision.
Under EU law, the Commission may bring infringement proceedings where national measures restrict the freedom of establishment or the free movement of capital. It can also intervene in mergers that meet EU thresholds or where a case is referred by a national authority. In May, the Commission extended its review timetable on the UniCredit-BPM case after a referral request, underscoring the multilayered oversight that spans competition and prudential channels.
Italy has defended its stance on security grounds, arguing that retail savings are a matter of national security and that exposure to Russia presents specific risks while the war continues. Officials have said the tool is used sparingly and could be streamlined to reduce administrative burdens, but maintain that it applies where the national interest is engaged. Rome told the Commission it sought to shield domestic depositors from any indirect benefit to the Russian economy through UniCredit’s ongoing Russian operations.
Next steps hinge on the Commission’s letters to Rome. One would order withdrawal of the UniCredit-BPM decree; the other would challenge the legal basis for applying golden powers to banking transactions. Italy will be able to reply within set deadlines, and any final decision may be appealed at the EU courts. The initiative comes amid broader debate on whether national screening tools—developed for strategic sectors—should extend to banks already supervised at euro-area level by the ECB.
For UniCredit and Banco BPM, the Commission’s action does not revive the abandoned offer. However, a finding against the decree could remove obstacles to future approaches—by UniCredit or other bidders—provided any transaction secures the necessary EU-level approvals. For the EU executive, the case is a test of its ability to police national interventions while advancing the single market and banking-union agendas that underpin Europe’s competitiveness and capital formation.
