Italian court hands Meloni partial victory in UniCredit banking merger battle

BRUSSELS — Italian Prime Minister Giorgia Meloni secured a qualified victory on Saturday after a top court supported her government’s efforts to influence a controversial banking merger.

A regional administrative court, TAR Lazio, ruled that Rome was partially right to restrict Milan-based UniCredit’s bid for local rival BPM under national security rules, while it sent back two of the conditions to the government for review.

But the ruling leaves many questions unanswered in a complicated political fight involving Italy's second biggest bank, the Italian government and the European Union executive.

Earlier this year, Italy used foreign investment screening powers — or "golden power" — to impose harsh conditions on UniCredit’s bid for BPM. UniCredit appealed the decision claiming that the conditions are disproportionate and effectively prevent it from doing the deal.

The court said on Saturday that the government should review two of the conditions imposed by Rome on UniCredit — on the loan-to-deposit ratio and on project finance — whilst it did not rule against two other key conditions under appeal regarding securities and UniCredit's exit from Russia.

The Italian government welcomed the ruling, saying it largely legitimizes the use and structure of golden power rules, recognizing that economic security is part of national security, a government official told POLITICO.

Italy’s use of foreign investment screening rules to hamper a merger which is disliked by Giorgia Meloni’s government has raised eyebrows in Brussels, where the European Commission has opened two separate probes into the matter.

The Commission’s competition directorate cleared UniCredit’s deal with conditions on June 19 and is ready to warn Italy against overriding Brussels’ exclusive competences on large mergers.

The fate of the bid remains unclear as UniCredit’s formal offer for BPM expires on July 23.

UniCredit did not immediately have a comment.