BRUSSELS/MILAN (Reuters) -Italian bank UniCredit is expected to win European Union antitrust approval for its Banco BPM takeover bid after offering to divest 206 branches to ease competition concerns, people with direct knowledge of the matter said on Tuesday.

The European Commission, which acts as the competition enforcer for the 27-country EU, is keen on banking consolidation to create strong lenders in the bloc, one of the people said.

The majority of branches to be divested are in northern and north-eastern Italy, the sources said.

The EU executive, due to rule on the bid by June 19, declined to comment.

UniCredit's bid prompted Italy to invoke its "golden powers" on the grounds of national security concerns and to set the terms of UniCredit's offer, which include keeping Banco BPM's loan-to-deposit ratio unchanged for five years post-acquisition.

Another condition is that UniCredit must not reduce Banco BPM's holdings of Italian securities tied to Anima Holding, a fund manager Banco BPM acquired earlier this year.

UniCredit has challenged the government-imposed conditions, with a court hearing set on July 9.