The European Central Bank has issued a negative opinion on the application of so-called “Danish compromise” rules to the ongoing takeover by Banco BPM of Anima Holding.

The Italian lender launched a buyout offer for the fund manager in November, contingent on the ECB allowing it to apply the Danish Compromise rules.

These rules allow a bank to risk-weigh an insurance holding instead of deducting it in full from its regulatory capital.

In BPM’s case, the rules would have also applied to an asset bought via an insurance arm. Banco BPM has bid for Anima through its insurance subsidiary BPM Vita.

The ECB’s opinion is not binding and a final decision on the matter rests with the European Banking Authority, the source said.

Following the reported negative opinion by the ECB, Banco BPM shares dropped sharply. As of 1014 GMT, they were down by almost 6%.