The European Central Bank (ECB) has given the green light to Crédit Agricole to acquire a larger stake in Italy's Banco BM, allowing it to rise to 19.9 per cent.

The move poses a challenge to UniCredit, complicating plans of the Italian bank which said on Wednesday it would launch its 14-billion-euro ($15 billion) tender offer in Banco BPM on April 28.

Crédit Agricole became Banco BPM’s largest investor in 2022 and currently holds 9.9 per cent of capital in the financial institution, with the firm planning to exercise derivative instruments to rise to 19.9 per cent.

The French bank added in a statement they don't intend to be long-term shareholders, and they are not seeking to launch a takeover bid for Banco BPM.

The Italian market represents a crucial market for Crédit Agricole, being its largest foreign market.

The bank operates across various sectors including consumer loans, corporate investment banking, asset management, insurance, and private banking. Crédit Agricole has an extensive presence in Italy, with over 900 branches and millions of customers, underscoring the importance of protecting its commercial interests there.

Italy's second-biggest bank said its tender offer, cleared by market watchdog Consob, will run until June 23. After the announcement of the Banco BPM bid, UniCredit chief executive officer Andrea Orcel did invite Banco BPM's investors to discussions, emphasising he was keen to find mutually beneficial solutions.

However, buyout regulations mandate equal treatment for all shareholders, meaning that any offer made must be fair and equitable to all parties involved, ensuring no preferential treatment is given to specific shareholders.

Credit Agricole is also Unicredit's partner in asset management with the products of its subsidiary Amundi in a distribution deal due to end in 2027.

The contract ensures that Amundi’s products represent about 75 per cent of the assets UniCredit manages for its Italian clients. Although the deal is set to expire in 2027, UniCredit has the option to exit the agreement as early as this year, with Orcel setting a May deadline for Crédit Agricole to decide on extending the contract.

In 2017, Amundi acquired Pioneer Investments, UniCredit's fund management business, for €3.6 billion with the acquisition resulting in a significant expansion of Amundi's presence in Europe as it strengthened its position as one of the leading asset managers globally.

Amundi's shares fell 6.9 per cent on Wednesday, marking the biggest daily drop since 2020 and indicating investors' rising concerns about the implications of the difficult negotiations between UniCredit and Credit Agricole.

On the other side, Agos, the consumer credit joint venture of Credit Agricole (61 per cent) and Banco Bpm (39 per cent), closed 2024 with a net profit of €190 million and revenues of €840 million.

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