Shortly before the COVID-19 contagion emerged in Italy in February, Intesa announced a surprise all-share offer for UBI to create the euro zone's seventh-largest banking group with a focus on asset management and insurance.

"Thanks to the support of our shareholders we continue to pursue with even greater conviction the exchange offer for UBI," Chief Executive Carlo Messina said in a statement.

He reiterated Intesa would push ahead with the deal even if UBI shareholders tendered only half of its capital plus one share, a lower acceptance threshold than the 66.67% initially targeted by Intesa.

Analysts have said a lower control threshold reduces the potential for synergies and the earnings boost expected from the deal.

Intesa, is offering 1.7 new shares for each UBI share tendered, valuing Italy's fifth-largest bank at 2.7 billion euros (2.36 billion pounds), down from 4.8 billion euros when the offer, which has met resistance from some UBI shareholders, was announced.

Italy's banks <.FTIT8300> have lost 44% of their value since the start of the coronavirus outbreak, which had claimed 26,644 lives in the country as of Sunday, the second highest death toll after that of the United States.

Intesa says the pandemic makes its offer more compelling because larger banks will find it easier to weather the fallout from the crisis, which is expected to cause an 8% contraction in Italy's economy this year, driving corporate insolvencies to 10%.

Italian banks, which were just emerging from a painful clean-up following previous recessions, face fresh loan losses and have little choice but to step up cost cuts to offset slumping revenues.

Intesa, whose annual general meeting was held behind closed doors due to the pandemic, said shareholders accounting for 52.3% of its capital attended the meeting through a single representative.

Shareholders approved issuing up to 1.945 billion new shares with 98% of votes, while 99% voted in favour of using 2019 profits to boost the bank's capital reserves as demanded by the European Central Bank.

Intesa reports first-quarter earnings on May 5. It said last week it would provide then an assessment of the impact of the pandemic on the group.

Bracing for a surge in unpaid loans, rival heavyweight UniCredit said it would book around 900 million euros in additional loan loss provisions in the first quarter to take into account the expected economic recession.

(Reporting by Valentina Za; Editing by Mark Potter)