The European Union is urging Italy to introduce further changes to its golden power legislation after an earlier revision failed to address Brussels’ concerns about government oversight in financial sector transactions. European officials believe the current framework gives Rome excessive authority to intervene in corporate deals, particularly in banking mergers and acquisitions. The dispute highlights broader tensions between national governments seeking to protect strategic interests and EU institutions responsible for maintaining fair competition and free movement of capital within the bloc. The outcome of these discussions could significantly influence the future of cross border consolidation in Europe’s fragmented banking sector.
The clash intensified after Italy’s second largest bank UniCredit abandoned a proposed takeover of smaller rival Banco BPM last year. UniCredit attributed the collapse of the deal to government intervention under Italy’s golden power rules, which allow authorities to review or impose conditions on strategic transactions. Brussels later issued a formal warning stating that the legislation might conflict with EU regulations governing financial supervision and competition. In response Italy introduced a revised framework earlier this year stating that national authorities should wait for decisions from EU regulators before applying golden powers in transactions involving banks and insurance companies.
European officials however believe the changes do not go far enough. According to sources familiar with the discussions the European Commission wants EU institutions such as the European Central Bank and the Commission itself to have the final authority over deals within their areas of competence. Brussels argues that national governments should not impose additional conditions on transactions already approved European regulators. Officials fear that allowing national intervention after EU approval could create uncertainty for investors and discourage cross border mergers that are considered essential for strengthening Europe’s banking system.
Italy has defended its position emphasizing the importance of safeguarding national economic interests. Government officials argue that golden power legislation is designed to protect sectors considered vital to national security and economic stability. Under EU treaties national security remains the responsibility of individual member states. Italian authorities therefore maintain that the government must retain the ability to intervene in certain strategic transactions when necessary to protect public interests or prevent potential risks to the domestic financial system.
The European Commission nonetheless believes the current legislation may overlap with the responsibilities of the EU’s Single Supervisory Mechanism and the European Central Bank which supervise major financial institutions across the euro area. Officials say national rules should be clearly defined and applied only in exceptional circumstances to ensure they remain compatible with EU law. Brussels has also raised concerns that government intervention in corporate deals could restrict the free movement of capital across the European Union which is a fundamental principle of the bloc’s internal market.
Companies operating in Italy have also expressed concerns about the golden power system arguing that it increases regulatory complexity and uncertainty for investors. Businesses must often notify the government of potential transactions to avoid possible penalties or regulatory delays. According to official data Italy reviewed more than nine hundred transactions under golden power scrutiny last year representing a significant increase compared with the previous year. The rise in notifications reflects the growing use of these powers in sectors considered strategic to national interests.
The European Commission is continuing discussions with Italian authorities in an attempt to reach a compromise that balances national security concerns with EU market rules. Officials say constructive dialogue is ongoing while legal procedures remain under consideration if compliance issues are not resolved. The dispute has also drawn attention across the financial industry because it could influence how future mergers and acquisitions are handled within the European banking sector. Greater clarity over the division of authority between national governments and EU institutions will likely shape investment decisions and consolidation strategies in the coming years.
