Crédit Agricole lifts its stake in Italian Banco BPM, a blow to UniCredit's offer

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France's Crédit Agricole has increased its stake in Banco BPM, which will complicate the Italian lender's approach to UniCredit.

Crédit Agricole, which is already Banco BPM's largest shareholder, announced on Friday that it had entered into financial contracts that will increase its stake in the lender from 9.9 percent to 15.1 percent. It added that it would seek approval from Italian regulators to hold up to 19.99 percent of Banco BPM.

The move by the French lender, which reflects UniCredit's use of derivatives to build a surprise stake in German bank Commerzbank earlier this year, comes after Banco BPM's rejection. the public purchase offer of 10.1 billion euros from its Italian rival at the end of last month.

The approach marks UniCredit chief executive Andrea Orcel's latest attempt to forge a European banking champion. It also surprised Italian officials, just weeks after Banco BPM took a 5 percent stake in rival Italian lender Monte dei Paschi di Siena.

Italian Prime Minister Giorgia Meloni's government hoped Banco BPM could spur consolidation in the country's banking sector, potentially merging with MPS and BPER Banca, to compete with UniCredit and Intesa Sanpaolo, the country's largest lender.

Orcel and the president of Crédit Agricole Philippe Brassac were to meet to discuss the public takeover offer from Banco BPM, according to a source close to the discussions.

Banco BPM said last month, in rejecting UniCredit's opening, that it remained “focused on the implementation of its 2023-2026 business plan and on the acquisition of [asset manager] Anima”.

However, under the so-called Italian passivity rule, as the target of a tender offer, Banco BPM cannot acquire new stakes in MPS or increase its tender offer by more than a billion euros on Anima over the next six months. The rule is intended to prohibit target companies from taking actions that could affect the outcome of a pending tender offer.

The Italian government is exploring ways to help Banco BPM counter UniCredit's approach, according to people familiar with the deliberations. Italian Finance Minister Giancarlo Giorgetti told reporters last month that Rome could use its so-called golden powers, designed to block foreign takeovers of strategic national assets, to impose conditions on UniCredit's attempt to take over Banco BPM.

Last week, the government denied having considered adopting an emergency decree to allow Banco BPM to circumvent the passivity rule.