UniCredit has announced it is unable to proceed with a definitive decision regarding its public exchange offer for Banco BPM, following conditions imposed by the Italian government.

The bank received a decree from the Presidency of the Council of Ministries, detailing the constraints under the Golden Power process for the takeover to proceed.

The conditions relate to future operations of the merged entity, including credit activity, liquidity management, and UniCredit’s business in Russia.

Additional constraints concern UniCredit’s ability to manage shareholdings and the assets under management of Anima Holding, an asset manager that Banco BPM is currently pursuing through a separate transaction.

UniCredit stated that while it aims to preserve or expand the new group’s support for SMEs, and maintain its asset management practices in the best interests of clients, the imposed conditions raise concerns.

The bank noted these could potentially restrict its operational freedom and result in penalties if compliance issues arise.

UniCredit also raised questions regarding the unusual application of special powers in a domestic transaction between two Italian banks, suggesting that the conditions could be misaligned with both Italian and EU law.

The bank said that the government’s prescriptions could harm its freedom and ability to make prudent decisions and possibly lead to unintended consequences, including fines.

UniCredit said it has responded to the authorities with its perspective on the decree and is awaiting further feedback.

Until then, the bank stated it is “not in a position to take any conclusive decision on the way forward” on the takeover offer for Banco BPM.

Earlier this month, UniCredit obtained approvals from the European Central Bank (ECB) and the Bank of Italy to proceed with its plan to take over Banco BPM.