MILAN, July 12 (Reuters) – An Italian court has upheld in part an appeal by UniCredit (CRDI.MI) , opens new tab against the government’s conditions to clear the bank’s $16 billion bid for rival Banco BPM (BAMI.MI) , opens new tab , but has backed Rome’s key request about the exit of UniCredit from Russia, the ruling showed on Saturday.

Both the Treasury and UniCredit were not immediately available for comment.

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Following supervisory demands, UniCredit has sharply cut its exposure to Russia, but it still runs a local subsidiary and needs approval from Russian authorities to cease any activities.

“There can be no doubt about the properness” of the prescription related to Russia which is “totally legitimate,” the court said in its ruling.

At the same time, the court ruled against the Italian government’s condition imposed on UniCredit that it should keep Banco BPM’s loan-to-deposit ratio unchanged for five years and also annulled a request regarding the project finance business.

UniCredit in November bid for Banco BPM after the latter became a shareholder in Monte dei Paschi di Siena (BMPS.MI) , opens new tab , fuelling speculation that the government was advancing long-held plans to promote a combination of the two banks.

Banco BPM has rejected UniCredit’s approach as hostile.

Using special powers that are meant to give European Union states a way to shield domestic assets from unwanted interest on grounds of public order and national security, Italy in April imposed a set of conditions for UniCredit’s acquisition of BPM.

Reporting by Valentina Za, Giuseppe Fonte, Francesca Landini; writing by Francesca Landini; Editing by Sharon Singleton and Tomasz Janowski

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