UniCredit's bid for BPM also throws a spanner in the works for Italy's government, which had advanced plans for a merger of BPM with rival Monte dei Paschi di Siena which it saw as strengthening its banking sector without harming competition.

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.

MILAN (Reuters) - UniCredit's surprise bid for Italy's Banco BPM is hostile, a board member of the smaller lender told Italian newswire ANSA on Tuesday. He was speaking ahead of a Banco BPM board meeting for an initial discussion on the 10 billion euro ($10.5 billion) takeover bid launched on Monday by Italy's second-largest bank.

Italian lender UniCredit says its offer for domestic rival Banco BPM is separate from its pursuit of German bank Commerzbank.

Banco BPM SpA said the takeover bid it has received from UniCredit SpA wasn’t agreed in advance and isn’t in line with its performance.

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.

The Italian Treasury has denied a report that it is drafting an emergency decree to counter UniCredit’s (OTCPK:UNCFF)(OTCPK:UNCRY) 10B euro ($10.6B) bid for Banco BPM, Reuters reported late Friday. UniCredit made the offer for the smaller rival on Monday,