Intesa Sanpaolo launched a €30.6 billion takeover bid for Monte dei Paschi di Siena on Monday, setting up a contest for control of Italy’s oldest bank less than 24 hours after rival Banco BPM proposed merger talks and potentially reshaping the country’s banking sector.

Italy’s largest lender said its unsolicited cash-and-share offer values Monte dei Paschi at €10.09 per share, representing a 12.5 per cent premium to Friday’s closing price. The proposal covers all 3.04 billion outstanding shares and would create a banking group with a market capitalisation of about €126 billion, making it the eurozone’s second-largest listed bank behind Santander.

The move effectively challenges Banco BPM’s attempt to secure a tie-up with Monte dei Paschi. Banco BPM’s board had approved a merger proposal on Sunday aimed at creating Italy’s second-largest domestic banking group, but Intesa’s formal offer now places the decision directly in the hands of Monte dei Paschi shareholders.

Intesa said the acquisition would generate annual pre-tax cost savings of around €1.5 billion. The bank added that the combined group could target net income of €16 billion by 2029, compared with combined profits of €13.6 billion last year.

Carlo Messina, Intesa’s chief executive, previously described the recent wave of consolidation in the Italian banking sector as “the Wild West”. On Monday, Intesa said the proposed transaction represented “a key strategic opportunity in the Italian and European banking landscape” because of the potential synergies between the two lenders.

To address competition concerns, Intesa has reached a binding agreement with insurer Unipol under which approximately 635 Monte dei Paschi branches and related operations would be sold if the takeover succeeds. Unipol said it would pay up to €3.5 billion for the assets and subsequently combine them with BPER Banca, where it is the leading shareholder.

Under the arrangement, the enlarged BPER group would operate under the Banca Monte dei Paschi name, preserving the historic Siena-based brand. Intesa would retain roughly 625 branches, the Mediobanca business acquired by Monte dei Paschi last year, and its associated stake in insurer Generali.

Investors welcomed the prospect of a bidding battle. Monte dei Paschi shares rose about 10 per cent in early trading, while Mediobanca gained roughly 9.5 per cent. Intesa shares fell around 3 per cent as markets assessed the cost and execution risks of what would be the largest banking deal in Italian history.

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