What is next in Italy's banking saga?

By Valentina Za and Andrea Mandala

MILAN (Reuters) - The raft of takeover attempts rocking Italy's financial sector will be put to a market test in the coming months, when investors in the target companies will be deciding whether to tender their shares.

After receiving a green light from the Bank of Italy on Wednesday, Banco BPM starts the dance this month with its proposed purchase of fund manager Anima Holding.

UniCredit is expected to follow suit in April with its own buyout bid for Banco BPM.

Then there is also the state-backed Monte dei Paschi di Siena (MPS) which surprised markets with its move on Mediobanca, the top shareholder in Europe's third-largest insurer Generali - seen as the ultimate prize in the current market reshuffle.

By swooping on Banco BPM and building a 2 billion euro ($2.1 billion) stake in Generali, CEO Andrea Orcel has put UniCredit at the centre of the wave of dealmaking reshaping the sector.

It is not yet clear how Orcel will play his cards or how it will all pan out, but here is a summary of what investors should watch out for in coming weeks and months.

UNICREDIT'S BANCO BPM BID

UniCredit shareholders will vote on March 27 to approve issuing the shares needed to fund the 10 billion euro ($11 billion) unsolicited bid for Banco BPM.

The European Central Bank is expected to approve the offer around that time, paving the way for UniCredit to launch it in April.

At an around 1 billion euro discount to market prices, the offer is unlikely to succeed without a cash top-up, which Orcel has flagged as a possibility.

Under the conditions of the offer, the changed terms of the Anima deal give UniCredit the right to walk away until just before the offer's settlement, seen in June.

WHAT NEXT FOR BANCO BPM?

BPM's buyout offer for Anima worth up to 1.8 billion euros is set to start in the second half of March. Take-up already stands at 45% given BPM's 22.4% own stake and pledges by leading Anima investors to accept the improved bid.

Shareholders have authorised BPM's board to close the deal even before the ECB decides whether to grant it favourable treatment that would sharply reduce the deal's impact on the bank's capital ratios.

Banco BPM is confident the ECB will rule in its favour. There is no timing yet for the decision, which also matters for UniCredit's decision on the cash top-up.

WHAT ABOUT UNICREDIT'S COMMERZBANK STAKE?

Orcel has said the Banco BPM deal and its subsequent integration would not get in the way of a potential takeover of Commerzbank. UniCredit already owns 28% of its shares and is expected to get ECB approval around mid-March to own up to 29.9%.