Italy's passivity rule, a regulatory provision designed to prevent target companies from taking defensive or transformative actions during the pendency of a public takeover bid, has been triggered by UniCredit's offer for Banco BPM and is now constraining BPM's ability to advance its own strategic transactions. The rule prevents BPM from pursuing actions outside its ordinary course of business without obtaining prior shareholder authorisation during the period of UniCredit's bid, placing two significant deal processes in a state of regulatory uncertainty simultaneously and creating a complex multi-party situation in the Italian banking sector.
The most immediately affected transaction is BPM's pending EUR 1.6 billion acquisition of Anima Holding, the asset management group in which BPM had built a strategic position and which it sought to bring fully under its ownership as part of a push into wealth management. The Anima deal was agreed before UniCredit formally launched its offer, but is now caught in a legal and regulatory grey zone: BPM cannot freely advance the transaction while the passivity rule applies, yet allowing the deal to stall or lapse carries the risk of losing a key strategic asset to a competitor or of Anima's situation evolving in ways unfavourable to BPM's long-term plans.
THE PASSIVITY RULE AND ITS EFFECTS
Italy's passivity rule, codified in the country's consolidated financial act and reflecting the provisions available to member states under the EU Takeover Directive, prohibits a company subject to a public bid from implementing decisions outside the normal course of business once the offer has been formally launched. The rule reflects a policy choice — adopted by Italy and a number of other EU member states — to restrict target management from taking actions that could entrench the board's position, frustrate the bid, or materially alter the company's shape while shareholders are considering the offer terms. The rationale is to ensure that shareholders make an informed decision without the target being transformed mid-process.
For BPM, the effect of the rule is especially pronounced because the bank had committed to the Anima acquisition and to acquiring a 5% stake in Banca Monte dei Paschi di Siena before UniCredit's bid was announced. Both transactions now require either separate shareholder authorisation under the passivity framework to proceed, or a resolution of the UniCredit bid process before BPM can move forward freely. Each path carries its own complications: calling an extraordinary shareholder meeting adds time and cost, while waiting for the bid process to conclude could mean months of strategic paralysis for BPM's management.
REGULATORY TENSION AND POLITICAL DIMENSION
The situation surfaces a broader tension between Italy's market regulation framework and the government's approach to banking sector consolidation. Rome has been broadly supportive of domestic banking combinations that maintain Italian control over systemically significant institutions, while taking a notably cooler stance toward cross-border acquisitions led by foreign groups — a disposition that has also coloured Italian commentary on UniCredit's concurrent approach to Commerzbank in Germany. The passivity rule, while a procedural matter, has become a focal point for these wider anxieties about the pace and direction of consolidation in Italian banking.
How the passivity rule impasse ultimately resolves will depend on several factors: whether UniCredit's offer advances to a completion process or is withdrawn, whether BPM's shareholders convene to authorise specific strategic actions, and whether Italian market regulators or courts are called upon to clarify the legal boundaries of permissible management activity during the bid period. The convergence of a contested cross-border takeover offer, a domestic asset management acquisition, a minority stake in another major Italian bank, and an alert government sensitive to national interest considerations makes this one of the most legally and commercially intricate M&A situations in European banking this year.