Italy's insurance regulator IVASS is set to rule early next week on the takeover offer by Intesa Sanpaolo for rival UBI, a source with knowledge of the matter said on Friday.
IVASS's verdict is the last regulatory approval needed before market watchdog Consob examines the offer prospectus.
The deal has already received green lights from the European Central Bank, the Bank of Italy and Luxembourg's financial services authority.
Based on Italian rules, Consob has five working days from the IVASS decision to rule on the prospectus.
Consob's approval would open the way for Intesa to launch the all-paper exchange offer for UBI, after it announced its plan to bid in February and create the euro zone's seventh-biggest banking group.
But the deal has run into difficulties with Italy's antitrust authority, which says it would strengthen or create a dominant position for Intesa in several areas.
To address these issues, Intesa had struck a deal in which BPER Banca would buy up to 500 branches and about 20 billion euros in assets from the new group.
Intesa now aims to submit further antitrust remedies by 0800 GMT on Monday, increasing the number of branches sold by at least 10%, a second person familiar with the matter said.
After meeting on Thursday to discuss the deal with Intesa, the BPER board was ready to reconvene before Monday to revise its accord once an agreement is found, a separate source with knowledge of the matter said.
A final antitrust hearing is scheduled for June 18 but a verdict is not expected until late July, complicating matters for Intesa which had initially planned to launch its bid before the summer holiday period, by which time it had expected to have cleared all regulatory hurdles.
The antitrust authority has said there is too much uncertainty surrounding the BPER deal.
The takeover has met resistance from some of UBI's shareholders, but Intesa has said it will go ahead with the offer even with a take-up of 50% plus one share.
Such a threshold, which the ECB approved, would allow Intesa to secure approval for the branch sales from UBI's board. But minority shareholders may challenge the move.
A senior Intesa executive on Thursday was quoted as saying the bank was confident of gaining antitrust approval for the deal based on the regulator's preliminary findings.
(Reporting by Valentina Za and Andrea Mandala; Editing by Agnieszka Flak/ Edmund Blair/Jane Merriman)