Banco BPM to proceed with Anima bid despite 'Danish Compromise' snag

By Valentina Za and Andrea Mandala

MILAN (Reuters) -Banco BPM intends to proceed with its bid for fund manager Anima Holding, despite the European Central Bank's stance on capital treatment that makes the deal more costly, the bank said on Thursday.

The ECB has issued a negative opinion on Banco BPM's plan to use what is known as the 'Danish Compromise' to facilitate the deal, making it more expensive in terms of its impact on capital reserves.

In a statement, Italy's third largest bank said it had decided to proceed without ECB approval and confirmed the strong strategic rationale for the bid. It has also asked the ECB to clarify its reasons for the stance.

"It makes sense for Banco BPM to push ahead, the capital impact doesn't affect the reasoning behind the deal," Milan's Bocconi University finance professor Stefano Gatti said.

Banco BPM is buying Anima to boost its fee income as interest rates decline. But bigger rival UniCredit has launched its own move to acquire BPM.

UniCredit Chief Executive Andrea Orcel said on Thursday it would only proceed with the proposal on the right terms, as chances of a sweetener recede.

Orcel had long raised doubts about BPM's chances of being able to use the favourable rules.

It also emerged on Thursday from a document reviewed by Reuters that the European Banking Authority (EBA) has declined to address a query by an unnamed bank on the 'Danish Compromise' issue.

The date of the document identifies it as the request filed by Banco BPM, which had turned to the EBA on February 19 pending an answer from the ECB.

Following the negative opinion by the ECB on Wednesday, Banco BPM had pinned its hopes on the EBA, which is in charge of regulatory clarifications, meaning its stance would take precedence over the ECB's.

However, their views are normally aligned, people with knowledge of their functioning told Reuters on Wednesday.

The EBA said the "Q&A" tool Banco BPM used to raise its query was not suitable for an issue which required more in-depth consideration.

"The issue touches upon profiles and elements which require a deeper and broader consideration, not compatible with the remit of the EBA Q&A tool," it said.

(Reporting by Valentina Za, editing by Gianluca Semeraro, Kirsten Donovan and David Gregorio)