UniCredit's surprise €10.1 billion takeover bid for Banco BPM, Italy's third-largest bank, has triggered significant concerns from the bank and unions over potential job losses and strategic implications.

Banco BPM's chief executive officer Giuseppe Castagna strongly rejected the unsolicited offer, warning employees that the deal could result in more than 6,000 job cuts. In a letter to staff, Castagna emphasised the bank's autonomy, stating: "We are a big autonomous bank, an Italian bank with a strong vocation of being close to our regions and to the small and medium-sized companies that make up the backbone of our country."

The bank's board unanimously dismissed UniCredit's proposal, arguing that the 0.5 per cent premium "does not reflect in any way the underlying profitability and the additional potential for value creation" for shareholders. The offer actually represents a 7.6 per cent discount compared to Monday's closing price, according to Banco BPM.

UniCredit's chief executive officer Andrea Orcel defended the approach, noting that the deal "has been awaited for years," while acknowledging that "deals that touch the banking system are always complex."

The potential merger would significantly impact Banco BPM's ongoing strategic plans, including its recent €1.6 billion bid to acquire asset manager Anima Holdings and a 5 per cent stake purchase in Monte dei Paschi di Siena. The takeover would trigger Italy's passivity rule, preventing BPM from making further strategic moves.

The Italian government has also expressed reservations about the deal. Finance minister Giancarlo Giorgetti suggested potentially invoking "golden power rules" to have a say in the business combination, referencing UniCredit's recent advances in Germany with Commerzbank.

Banking unions have also raised concerns. The FABI union stated there is "great concern about the employment fallout that could result from the deal," describing it as a "market transaction in a phase of radical changes in the banking sector."

---