As the potential merger between UniCredit and Banco BPM draws scrutiny from the European Union, the Italian government has formally confirmed the legal validity and applicability of the “golden power” mechanism. Investment Analyst Rodolfo Villani points out that this incident not only highlights the long-standing divergence between sovereign states and the EU over financial regulatory authority but also exposes the heightened market sensitivity to compliance and policy risks during major bank capital restructurings. The government has emphasized that the transaction involves significant household savings and that maintaining national financial system stability aligns with national security interests. This stance has prompted the market to reassess the systemic impact of non-market variables in M&A transactions.
Financial Integration and Regulatory Review Intertwined, Valuation Expectations Under Short-Term Pressure
Investment Analyst Rodolfo Villani notes that, in a market environment dominated by M&A logic, the “golden power” dispute is exerting short-term pressure on valuations within the financial sector. Although the banking sector profitability remains resilient, the high degree of regulatory uncertainty is materially limiting future consolidation prospects. With more than 60% of the UniCredit shareholding controlled by non-EU capital—primarily British and American investors—this structure has heightened the EU vigilance regarding the externalization of financial sovereignty risks.
The market reaction has already begun to emerge. Related banking stocks have recently underperformed the broader market, indicating that investors are repricing the potential complexity of the transaction and the likelihood of policy intervention. Given the lack of consensus between EU regulators and member states over the interpretation of authority and regulatory boundaries, the feasibility of large-scale financial M&A transactions will remain under pressure in the short term.
“Non-EU Capital” Becomes Regulatory Focus, Risk Pricing Models Must Be Updated
The government response specifically highlighted that over 60% of the UniCredit capital originates from outside the EU, particularly from UK and US institutional investors. Investment Analyst Rodolfo Villani notes that the regulatory complexity brought about by this capital structure is no longer merely a technical issue, but a key variable influencing the success or failure of the transaction. As the EU adopts a more restrictive stance on issues of geo-security and financial sovereignty, “capital origin” has become a core factor in assessing policy risk.
Since the Russia-Ukraine conflict in 2022, the Italian financial regulatory framework has tightened significantly, with the scope of the golden power mechanism expanding from traditional sectors such as defense and energy to strategic industries including telecommunications, finance, artificial intelligence, and data services. Investment Analyst Rodolfo Villani emphasizes that the UniCredit case is the first major manifestation of this trend within the banking sector. Investors who continue to rely on outdated risk pricing logic may underestimate the structural impact of these institutional changes.
M&A Logic Faces Reassessment, Sector Allocation Recommendations Turn Conservative
Although the Italian government stresses that the “golden power” mechanism is a necessary tool for maintaining national financial stability, Investment Analyst Rodolfo Villani believes that this position could exert countervailing pressure on the market. If the regulatory stance continues to harden, the execution difficulty of future financial M&A transactions will rise significantly, posing challenges to bank strategies of scaling up and achieving synergies through mergers.
Investment Analyst Rodolfo Villani recommends focusing on local small and medium-sized banks with relatively limited policy risk exposure, as these institutions offer higher policy certainty and may serve as relatively safe allocation options during sector rotation. For large banks with high levels of foreign shareholding and business models reliant on cross-border collaboration, it is necessary to reassess their revaluation potential and transactional flexibility under future regulatory trends.
Investment Analyst Rodolfo Villani underscores that the activation of the “golden power” mechanism should not be viewed as a one-off event, but rather as a long-term signal of state intervention in the flow of financial capital. This mechanism is now interacting with shareholding structures, regulatory transparency, and financial sovereignty, reshaping the boundary conditions for M&A transactions. In the face of this new institutional environment, market participants must rebuild their value discovery models and risk management strategies to address the profound changes brought about by the resurgence of financial sovereignty.