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Shares in Intesa Sanpaolo surged more than 3 per cent after its chief executive said the Italian bank would stick to its plan for paying €3.4bn in dividends for 2017 even if it pursued a takeover bid for insurer Generali.

“In any M&A we will stick to our €3.4bn dividend target,” said Carlo Messina, the CEO of Italy’s biggest bank by market capitalisation, told analysts after reporting full-year results on Friday.

Mr Messina added that any merger or acquisition by Intesa would have to be “capital neutral” without counting on any benefit from the so-called Danish compromise, a rule that gives a capital boost to banks that own insurers.

Earlier on Friday Intesa reported a 13.6 per cent increase in full-year profits to €3.1bn after it kept investors guessing by saying a potential takeover bid for the insurer Generali remains “only the subject of a case study”.

The bank confirmed last week that it was weighing a bid for the country’s largest insurer Generali, sending shockwaves through Italy’s tight-knit financial community.

The mooted deal, if successful, would reshape Italian finance, creating a financial colossus in Italy with a combined market value of €60bn, dwarfing Intesa’s nearest rival UniCredit.

Shares in Intesa have fallen 10 per cent since news of the potential deal first surfaced last week, partly on fears that it could affect the bank’s dividend. The shares rose 3.4 per cent in afternoon trading, boosted by Mr Messina’s reassurance about the dividend.

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