UniCredit's bid risks scuppering the government's plans to form a third strong banking player alongside Intesa Sanpaolo and UniCredit through a merger of BPM with state-owned Tuscan lender Monte dei Paschi di Siena (MPS), both of which have ties with Italy's biggest fund manager, Anima Holding.

UniCredit SpA informed top officials in the Italian government and Banco BPM SpA Chairman about its intention to make a takeover bid for its smaller rival before announcing the move on Monday, people with knowledge of the matter said.

The Italian Treasury on Friday denied drafting an emergency decree to counter UniCredit's takeover bid for smaller rival Banco BPM after the Financial Times reported Rome was considering this option.

UniCredit SpA has hired Deloitte LLP to advise Italy’s second-biggest bank on its takeover bid for Banco BPM SpA, people familiar with the matter said.