MILAN Intesa Sanpaolo (ISP.MI) said on Friday a possible tie up with insurer Generali (GASI.MI) was just a "case study", leaving investors guessing whether the bank would eventually launch a bid for Italy's biggest insurer.
Italy's biggest retail bank said last week it was looking at possible "industrial combinations" with Generali after sources said it was mulling a share offer to take a majority stake.
On Thursday Generali shares rose sharply on talk an offer could be on its way with one trader saying Intesa was readying a cash and shares deal worth 17 euros a share.
A spokesman for the lender denied on Thursday it was preparing any bid. In its Friday statement, the bank said possible industrial combinations with Generali continued to be "only the subject of a case study."
This was "part of the various analyses that the bank's management regularly carries out about the group's options for growth, both internal and external," it said.
Fund managers said it was not clear if Intesa was back-pedaling or playing for more time to make up its mind.
"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.
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.
Generali, whose biggest investor is influential investment bank Mediobanca (MDBI.MI), is seen by Rome as a strategic asset.
A source close to Generali said there was a growing feeling Intesa could walk away from a deal.
"Intesa's plan is too weak from an equity perspective and a piecemeal sale of Generali is anti-Italian," the source said, adding Allianz was not interested in coming to Intesa's aid by buying Generali assets and Axa was not keen either.
Last week Intesa's Chief Executive Carlo Messina said he saw growth potential by combining banks with insurers but added any deal should not weaken capital strength or shareholder returns. Messina also said the bank would take the "necessary time" to assess its options.
At 1010 GMT Generali shares were down 0.5 percent at 14.87 euros while Intesa shares were up 0.9 percent.
Intesa is due to release its preliminary 2016 results later on Friday after a board meeting.
On Thursday Intesa denied the board's agenda would include a Generali bid and ruled out any extraordinary board meeting over the weekend.
(Additional reporting by Danilo Masoni and Pamela Barbaglia; Editing by Elaine Hardcastle)