By Adria Calatayud

Credit Agricole said it bought financial contracts that could raise to 15.1% its stake in Banco BPM, which is being targeted by UniCredit in a $10 billion-plus bid.

France's Credit Agricole said late Friday that it would apply for authorization to increase its stake in BPM above 10% to up to 19.9%, but ruled out a tender offer for shares in the smaller Italian bank.

The move seeks to cement Credit Agricole's position as BPM's largest shareholder after UniCredit in late November made an all-stock offer for BPM that values it at 10.1 billion euros ($10.67 billion). BPM rebuked the bid, saying it undervalued the bank and created uncertainty.

Italy's UniCredit has sought to expand through dealmaking. It took a big stake in Germany's Commerzbank earlier this year, but its attempts to engineer a tie-up faced political opposition. With its pursuit of BPM, UniCredit would reinforce its position as Italy's No. 2 bank by assets and gain scale in the wealthy Lombardy region.

Credit Agricole said it entered into financial instruments relating to a 5.2% stake of BPM that would take its position to 15.1%, subject to regulatory authorization. Credit Agricole currently holds a 9.9% stake in BPM.

Financial terms weren't disclosed, but Credit Agricole said the transaction is expected to have a non-significant effect on its CET1 capital ratio, a measure of its financial strength.

The French bank said the move is consistent with its strategy as a long-term investor and partner of BPM.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

December 09, 2024 01:43 ET (06:43 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.