MILAN (Reuters) -Banco BPM on Friday secured shareholder approval for its decision to pay more to buy fund manager Anima Holding, a key plank of the Italian bank's defence strategy against suitor UniCredit.

UniCredit in late November swooped on Banco BPM, which has long been a natural takeover target for the bigger peer given its roots in Italy's wealthy Lombardy region, where UniCredit's market share is considered too small.

UniCredit's 10 billion euro all-share bid had put at risk the buyout offer Banco BPM had launched two weeks earlier to take full control of Anima.

The up to 1.8 billion euro Anima deal will boost the fees BPM makes by selling Anima's mutual funds at bank branches, at a time when interest rates are falling, compressing lending margins.

Given UniCredit's buyout offer, Banco BPM had to receive shareholder approval before raising its bid for Anima.

The proposal got backing from shareholders equivalent to 97.6% of BPM's capital present at the meeting, which was attended by investors holding 56.6% of BPM's total capital.

UniCredit has reserved the right to drop its own offer for BPM if the Anima bid's terms were to change. UniCredit did not immediately respond to a request for comment on the outcome of Friday's vote.

The shareholders also gave the board the power to waive some of the conditions the bid is subject to, such as clinching the Anima deal before knowing if the European Central Bank grants it a favourable capital treatment known as 'Danish Compromise'.

Banco BPM is now offering 7 euros for each Anima share, versus 6.2 euros previously, to get the 77.6% of Anima it does not already own. By 1428 GMT Anima shares were flat at 6.93 euros each.

Banco BPM shares lost 0.2% at 9.564 euros, compared with the 8.825 euro price implicit in UniCredit's all-share bid.

UniCredit had originally offered a 0.5% premium to the market price, which has since turned into a near 8% discount as investors bet on a sweetener. UniCredit CEO Andrea Orcel has not ruled out adding a cash top-up.

Banco BPM's top shareholder Credit Agricole attended Friday's meeting, according to a person close to the French bank. That means it backed the proposal, given that only shareholders holding less than 3% of BPM's capital failed to vote in favour.

Credit Agricole is awaiting the European Central Bank's authorisation to raise its BPM stake above the current 9.9%. In December it disclosed a derivatives deal for an additional 5.2% stake.

A filing on Thursday showed that Deutsche Bank has now acquired a 5.2% stake in BPM. Three sources close to the matter on Friday said the stake is held on behalf of Credit Agricole.

(Reporting by Andrea Mandala; Editing by Valentina Za)