MILAN (Reuters) - Italy's top retail bank Intesa Sanpaolo (ISP.MI) is still examining a possible tie-up with insurer Generali and will take all the time it needs to make up its mind, it said on Friday.
Chief executive Carlo Messina told analysts on a conference call the lender would not sacrifice its strong capital base nor a planned 3.4 billion euros ($3.7 billion) dividend payout on its 2017 accounts for the sake of a deal.
"We are still checking if potential industrial combinations involving Assicurazioni Generali fit with the strategic priorities included in our plan," Messina said.
"This step will take all the time necessary for performing a comprehensive and solid assessment," he said, adding that this phase had to be successfully completed before the bank could start work on the possible structure of a deal.
Intesa, whose stock closed up 2.7 percent at 2.2380 euros, has been under pressure to reveal its intentions after confirming last week that it was looking at a possible bid for Generali as it seeks to cement its shift toward asset management to offset the low profitability of core retail banking.
But bankers have warned that any such deal would be complex and could lead to a break-up of Generali to clear antitrust hurdles and minimize overlaps between the two companies. Intesa has an extensive insurance business of its own.
Management changes at Generali and political weakness in Rome have helped fuel bid talk in recent months with media reports pointing to Axa (AXAF.PA), Allianz (ALVG.DE) and Zurich Insurance Group (ZURN.S) as being interested in the group or parts of it.
The insurer, whose biggest investor is influential investment bank Mediobanca (MDBI.MI), is seen by Rome as a strategic asset because of its large holdings of Italian government bonds.
A source close to Generali, whose market value of 23 billion euros compares to Intesa's 36.5 billion euros, said there was a growing feeling the bank could walk away from a deal.
"The picture is increasingly blurred but it seems to me things are dragging out, possibly making Generali more vulnerable to a foreign takeover," said Roberto Lottici, fund manager at Ifigest which owns shares in Intesa and Generali.
Intesa's planned dividend payout of 3.4 billion euros for 2017 is lower than the 4 billion euros previously pledged by Messina, who said he had preferred to take a prudent stance given the challenging market environment.
Despite the guidance cut, Intesa will still be meeting its goal of paying 10 billion euros in dividends between 2014-2017.
The bank's fourth-quarter net profit came in at 776 million euros, a tad lower than an analyst average forecast of 801 million euros.
The results were hit by contributions the bank made to rescue funds set up to help weaker Italian lenders, including a 227 million euro writedown - or 33 percent - on its investment in bailout fund Atlante.
Intesa confirmed its solid capital position with a Common Equity Tier 1 at 12.9 percent, one of the strongest in Italy.
($1 = 0.9270 euros)
Editing by Mark Potter and Ruth Pitchford