Published by Global Banking & Finance Review®
Posted on March 26, 2025
4 min readLast updated: January 24, 2026
Add as preferred source on GoogleThe ECB opposes Banco BPM's request for Danish Compromise in its Anima deal, affecting financial sector consolidation.
By Andrea Mandala and Valentina Za
MILAN (Reuters) -The European Central Bank has issued a negative opinion on Banco BPM's request for favourable capital treatment for its proposed bid for fund manager Anima, the Italian bank said, in a potential blow to other deals relying on the same advantage.
Banco BPM, Italy's third-largest lender, and French bank BNP Paribas, had both made requests to the ECB to use what is known as the 'Danish Compromise' in takeovers of asset managers carried out through their insurance businesses.
Without the favourable capital treatment those transactions, including BNP's proposed acquisition of AXA's asset management arm, become more expensive. The ECB decision could, therefore, have implications for consolidation across Europe's financial sector.
The ECB has said it will decide on a case-by-case basis.
BNP Paribas, whose AXA asset management takeover was agreed last year but is yet to be finalised, declined to comment when asked if it had been informed of a decision on its request.
Banco BPM was relying on being able to apply the rule to limit the capital hit from the Anima acquisition, and distribute an additional 1 billion euros ($1.08 billion) in dividends to shareholders through 2026.
Without the benefits, the Anima acquisition would shave 268 basis points off Banco BPM's core capital ratio, instead of around 30 basis points had they been applied.
The bank's shares tumbled 5% on Thursday, with traders in Milan saying investors were also fretting over whether UniCredit, which has launched its own move to acquire BPM, may now drop that bid.
UniCredit said on Friday that the lack of the Danish Compromise for Banco's Anima takeover would cost it an extra 44 basis points in terms of its core capital ratio if it bought 100% of the bank.
However, the drop in BPM's share price reduces the cash sweetener UniCredit is expected to have to add if it wants its Banco BPM acquisition to succeed.
INTERTWINED TAKEOVERS
Banking executives have eagerly awaited the ECB's stance, with industry sources saying a positive opinion on the use of the Danish Compromise would support further dealmaking.
BPM said on Wednesday that the ECB's opinion was not a final decision. That rests with the European Banking Authority.
Experts, however, say the EBA is unlikely to differ in its view from the ECB since the bank regulators traditionally work in coordination.
The ECB declined to comment. The EBA did not immediately reply to a request for comment.
BPM had prepared for the possibility that regulators might not allow the Danish Compromise by asking shareholders to give its board the power to proceed with the Anima deal even without it.
The board will discuss the matter on Thursday, it said in the statement.
Banco BPM launched a buyout offer for the fund manager in November to boost its fee income, just before becoming itself a takeover target of larger rival UniCredit.
UniCredit said at the time that it reserved the right to drop its bid for BPM if the terms of the Anima deal changed.
Banco BPM, which has rejected UniCredit's proposal, has already increased its offer for Anima.
The Danish Compromise reduces the burden for banks of owning an insurer by letting them hold capital against insurance holdings on a risk-weighted basis rather than deducting them in full from their capital.
The insurance sector's tight regulation implies that a full capital deduction is not necessary.
Under a broad interpretation of the rules, the Danish Compromise could also sharply reduce the capital impact for a bank of buying an asset manager through its insurance arm.
Banco BPM bid for Anima through its insurance subsidiary BPM Vita.
($1 = 0.9270 euros)
(Reporting by Andrea Mandala and Valentina Za;Editing by Tommy Reggiori Wilkes and Joe Bavier)
The ECB's opposition to Banco BPM's use of the Danish Compromise for its Anima acquisition.
It increases the capital impact of the Anima acquisition, affecting Banco BPM's financial strategy.
A rule allowing banks to hold capital against insurance holdings on a risk-weighted basis.
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