By Valentina Za, Andrea Mandala and Elvira PollinaMilan — Italy’s top banking group Intesa Sanpaolo made a €30.6bn unsolicited cash-and-share bid on Monday to buy smaller rival Monte dei Paschi di Siena (MPS) to create the eurozone’s second-largest lender by market value.A successful transaction would place Intesa behind only Spain’s Santander, overtaking BBVA and France’s BNP Paribas and extending the gap with domestic rival UniCredit, which is striving to grow its German business by buying Commerzbank. In Italy, the deal would be behind only the Intesa–Sanpaolo IMI merger two decades ago in terms of size.Shares in Monte dei Paschi jumped about 12% on Monday while those in Intesa slipped 2%.In an initial brief response, Italy’s economy ministry said it had been informed of moves by Intesa and a separate approach for Monte dei Paschi on Sunday by Banco BPM, adding that they recognised the value of Monte dei Paschi, which was bailed out by the state in 2017 and reprivatised in 2023-24.Monte dei Paschi di Siena, Italy’s oldest bank, has a scheduled board meeting later on Monday and the bank said it will not comment on Intesa or BPM until its board discusses the matter at the meeting.Intesa CEO Carlo Messina said the offer, though not previously agreed, was friendly towards Monte dei Paschi investors and he was confident of securing their support by the time the bid concludes in December.He said on an analyst call that he was on good terms with the two principal investors ― Delfin, a holding company, and businessman Francesco Gaetano Caltagirone ― and was offering a cash component precisely to win them over.Intesa said its offer entailed a premium of 12.5% to Monte dei Paschi’s closing share price on Friday, which gave Monte dei Paschi a market value of €27.4bn.Monte dei Paschi has been a focus of merger activity in Italian banking since it acquired Mediobanca last year and in the process became the main investor in insurer Generali, a coveted asset in Italian finance.Intesa’s move potentially sidelines Banco BPM, which has long been the leading candidate to merge with Monte dei Paschi. Amid mounting expectations of an Intesa bid, Banco BPM, Italy’s fourth-largest bank, said on Sunday it wanted to open talks with MPS about a potential merger.Messina quipped that the BPM approach to Monte dei Paschi was a “love letter” as opposed to his concrete offer, adding the bid had not been prompted by BPM’s approach but rather the other way round.Under Italian takeover rules, Intesa’s formal bid now prevents MPS from agreeing to the terms of a deal with BPM without prior shareholder approval.Unipol dealIntesa secured a fifth of the Italian banking market when it bought midsized UBI back in 2020, leapfrogging UniCredit to become Italy’s largest bank.Citing antitrust limits, Intesa has kept out of a wave of mergers and acquisitions in Italy’s banking sector that began in November 2024, with Messina previously describing it as “the Wild West”.To address competition issues, Intesa said on Monday it had struck a deal with insurer Unipol to sell a banking business comprising 635 Monte dei Paschi branches ― roughly half the total ― and Monte dei Paschi’s central offices in Siena, if its bid is successful.Unipol is the main investor in smaller bank BPER Banca and an Intesa ally. It had played a similar role in the UBI deal, buying branches to help Intesa gain antitrust approval while supporting BPER’s expansion.Unipol said it would pay up to €3.5bn for the Monte dei Paschi deal and combine it with BPER to create a bank that would operate under the name Banca Monte dei Paschi.Generali stakesIntesa said the combined entity would have a market capitalisation of €126bn and a net income goal of €16bn in 2029, up from last year’s combined profits of €13.6bn.Messina said Intesa wanted to keep the 13% Generali stake which Monte dei Paschi acquired through Mediobanca but ruled out a takeover of the insurer.Intesa had attempted to buy Generali in 2017 but dropped the plan and grew its insurance business internally.Messina said a 3% Generali stake Intesa unveiled on Monday was necessary to defuse any defensive move from the insurer, which in 2017 took a stake in Intesa to thwart its approach thanks to Italian rules on cross-shareholdings.Intesa said it would also retain Mediobanca, strengthening its wealth management and corporate investment banking activities.