The changes will give Agos additional opportunities to further expand its client base and improve its cost of funding, Banco BPM said in a statement on Monday.

The changes to an 2018 agreement include an up to 24-month extension - to July 2023 - of a deadline for Banco BPM to exercise a put option on a 10% stake in Agos at the previously agreed strike price of 150 million euros ($183 million).

Banco BPM and Credit Agricole Italy had explored a possible tie-up as part of talks on the Agos venture, in which the Italian bank has 39% and Credit Agricole 61%. But discussions fell through on the M&A front, sources have said.

Credit Agricole Italy has now offered to buy third-tier Italian lender Creval for 737 million euros..

Banco BPM, which had been scouting for a possible partner, has turned its attention to BPER Banca and the two banks are considering a possible merger accord in the first half of 2021, sources have said.

In a move that would give it more freedom to pursue a potential merger deal, Banco BPM last week said it wanted to take full ownership of a partnership with insurer Cattolica.

($1 = 0.8215 euros)

(Reporting by Sabina Suzzi. Editing by Jane Merriman)