Italy is revising its “Golden Power” rules, which give the government authority to block or impose conditions on corporate takeovers. The move is primarily aimed at defusing a major legal battle with the European Commission, one that threatened heavy fines and a setback to Italy’s standing in the EU single market.

The immediate cause of the tension was Italy’s intervention in a proposed merger between two of its largest banks, UniCredit and Banco BPM. What began as a domestic banking deal quickly turned into a proxy war between national sovereignty and European integration.

In late 2024, UniCredit, Italy’s second-largest bank, launched a surprise €15 billion bid for Banco BPM, the country’s third-largest lender (UniCredit announcement, November 2024).

UniCredit’s CEO, Andrea Orcel, aimed to create a domestic “super-bank” capable of rivaling Intesa Sanpaolo, while also laying the groundwork for a broader European banking champion able to compete globally.

The Italian government was caught off guard. Rome had been quietly hoping Banco BPM would instead merge with the state-backed Monte dei Paschi di Siena (MPS), a move seen as a way to finally resolve the long-standing “MPS problem.” UniCredit’s bid effectively destroyed that plan.

In April 2025, the government exercised its Golden Power to approve the deal but attached conditions so strict they functioned as a poison pill.

UniCredit was ordered to fully exit Russia by early 2026. This was a major obstacle, as UniCredit still maintained one of the largest European banking operations in Russia. A forced sale during wartime conditions would likely result in multi-billion-euro losses.

Rome also demanded that the merged entity maintain its existing loan-to-deposit ratio for five years. In practical terms, the government wanted to prevent Banco BPM’s wealthy northern Italian deposits from being redirected to fund UniCredit’s operations in Germany or Eastern Europe.

In addition, UniCredit had to guarantee that lending to small and medium-sized enterprises (SMEs) would not decline, significantly limiting post-merger cost-cutting and balance-sheet optimization.

By July 2025, UniCredit formally withdrew its offer (UniCredit statement, July 22, 2025). Orcel declared that government interference had made the transaction “untenable.” UniCredit and its shareholders were furious, claiming billions of euros in lost value.

The fallout extended beyond Italy. The European Commission and the European Central Bank believed that Rome overreached its powers. “Supervision of banks within the eurozone remains a Singleton responsibility of the ECB,” while “Brussels sees an infringement of freedom of capital movement and an illegal distortion of the internal market” in Italy’s measures.

In late 2025, the EU started an infringement procedure against Italy, a legal action that might go all the way to the European Court of Justice and result in heavy daily fines.

Faced with this risk, Prime Minister Giorgia Meloni’s government opted for a tactical retreat. By revising the Golden Power rules, Italy is attempting a “rapid exit” from the infringement process before it escalates further.

Under the proposed revision, Italy would defer its own review of banking and insurance mergers until after the EU and the ECB complete their assessments. In effect, Rome would acknowledge EU primacy in financial supervision, at least procedurally.

A key element of the reform is the redefinition of “national security.” Italy seeks to formally codify economic and financial security as integral components of national security. By doing so, Rome hopes to build a stronger legal foundation for future interventions, arguing that protecting retail savings and domestic financial stability is a matter of sovereignty even if Brussels disputes the methods used.

This position places Italy at odds with the EU’s broader strategy. Brussels has long pushed for cross-border banking consolidation to create European champions capable of competing with U.S. and Chinese giants. Italy, however, remains deeply wary of what it views as “hostile” takeovers of strategic assets, particularly in banking, telecommunications (such as the Sparkle subsea cable network), and energy.

At the same time, Rome recognizes that appearing overly protectionist damages its ability to attract foreign investment. Thus, it seems that Golden Power’s reforms aim to find such a balance: signal the openness of the country to business while maintaining a more defensible mechanism for protecting essential interests.

Announced at the end of December 2025 by the Italian Parliament, “the reform essentially represents a implicit admission that the UniCredit intervention was close to the legal limits,” but by invoking EU and ECB supremacy in future instances, “Italy is likely trying to conclude the infringement procedure as soon as possible, before reaching the European Court of Justice,” which would make a judgment on the matter.

Such reforms will also help shield the Italian state against lawsuits from UniCredit and other investors who could allege that the Italian government illegally hindered business activity. In essence, Italy is sending a calibrated message to Brussels to step back from blocking domestic mergers, provided the EU acknowledges that economic security is a legitimate national interest within the single market framework.