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UniCredit has criticized the Italian government’s intervention in its hostile takeover bid for rival Banco BPM, labeling the imposition of conditions for the deal as “illegitimate.”

Following an Italian court’s decision on Saturday, which partially favored UniCredit against Giorgia Meloni’s government and its efforts to enforce strict conditions on the takeover deal, the Milan-based bank declared that the court’s ruling serves as “unequivocal proof that the manner in which [the government’s powers] were applied was illegitimate.”

Led by CEO Andrea Orcel, UniCredit further escalated tensions with BPM by accusing the latter of disseminating misinformation about the offer, negatively impacting its shareholders.

BPM had engaged in “unjustifiably aggressive and often misleading communications campaigns”, UniCredit said.

The lender also suggested that it would not improve the financial terms of its BPM offer, an option that was on the table in the early days of the bid in November. “In this context of profound uncertainties, BPM shareholders may have been deprived of an option,” it said.

An Italian court on Saturday partially upheld an appeal by UniCredit cancelling government prescriptions on BPM’s post-merger loan-to-deposit ratio and the maintenance of the two lenders’ project finance portfolios in Italy.

However, it ruled the government’s demand that UniCredit had to exit Russia if it wished to complete the takeover, was “totally legitimate” and “there can be no doubt about the fact it is proper”.

The administrative court has no jurisdiction over political decisions.

UniCredit said that “as [stated] by the administrative court, the European Central Bank has the [legal] competence to assess the matter and [we are] currently compliant with the ECB’s requests”.

UniCredit’s exit from Russia has been a major sticking point between the government and lender. The imposition of a fixed loan-to-deposit ratio, which was struck down by the court, had also been strongly criticised by UniCredit. Orcel has warned he was ready to walk away from the deal if the government did not relax its demands.

UniCredit did not say in the statement whether it planned to appeal against the decision or ask for a postponement of the offer which is due to close on July 23.

The court’s decision cancels the previous government decree altogether, leaving the deal in limbo pending a potential redrafting of Rome’s requirements.

UniCredit’s board will have a final say and could either opt to comply with the government’s updated requirements or walk away from the deal.

On Saturday BPM said in a statement it was pleased with the outcome of the appeal and called on UniCredit to “clarify its intentions” on the takeover. The bank declined to comment on UniCredit’s statement on Sunday.

Spokespeople for the Italian government were not immediately available for comment.

UniCredit is Italy’s second-largest lender. It launched concurrent takeover bids for BPM and Germany’s Commerzbank last year.

It has significantly reduced its exposure to Russia since the country’s full-scale invasion of Ukraine in 2022 but remains one of two European lenders to operate a local subsidiary.

Orcel has so far refused to exit the country altogether to avoid incurring a balance sheet hit. The exit would have to be authorised by Russian authorities.