The European Commission is pressing Italy to introduce additional changes to its “golden power” legislation, according to two sources familiar with the matter, after an earlier revision failed to resolve Brussels’ concerns that Rome’s review of banking merger deals may violate EU rules.
The dispute could influence the future of cross-border consolidation in Europe’s fragmented banking sector. Tensions intensified after Italy’s second-largest bank, UniCredit, said government intervention played a role in its decision last year to abandon a takeover attempt for smaller rival Banco BPM.
In November, the European Commission issued a formal warning to Italy, arguing that the country’s golden power framework—designed to protect strategic national interests—gives the government excessive authority to review, block or impose conditions on financial sector transactions.
To address Brussels’ concerns and halt an infringement procedure, Italy earlier this year passed legislation stating that the government should wait for EU decisions on prudential and competition matters before exercising golden powers in deals involving banks and insurance companies.
However, sources said the EU believes the changes do not go far enough. According to officials familiar with the discussions, Brussels argues that simply waiting for EU rulings is insufficient.
Instead, the European Commission wants a clear principle established that the Italian government cannot impose conditions on transactions that have already been approved by EU institutions such as the European Central Bank (ECB) or the Commission within their respective areas of authority. This issue emerged during the UniCredit-Banco BPM deal.
As negotiations enter a critical stage, sources who requested anonymity due to the sensitivity of the talks said Italy is still defending its right to safeguard national interests.
Under EU treaties, responsibility for national security rests with individual member states. However, Brussels maintains that restrictions affecting the free movement of capital within the EU should only be used in exceptional circumstances—even when governments cite public security concerns.
Responding to questions about the dispute, a European Commission spokesperson said the EU continues to engage in constructive discussions with the Italian government. The spokesperson emphasized that golden power rules should rely on clear and transparent criteria to ensure any government intervention is justified and consistent with EU law.
The Commission also said Italy’s current framework overlaps with the responsibilities of the EU’s Single Supervisory Mechanism, the European Central Bank and the European Commission.
In a separate case, EU authorities are also considering whether to require Italy to withdraw a decree that imposed conditions on UniCredit’s proposed takeover of Banco BPM.
Businesses have increasingly criticized the golden power mechanism, arguing that it leads to excessive government involvement in corporate decisions and adds bureaucratic hurdles. Companies are often required to notify authorities about planned deals or investments to avoid potential violations and penalties.
According to government data, Italy received 903 notifications of transactions subject to golden power scrutiny last year—an increase of 37% compared with 660 notifications in the previous year.