Italian PM hopes Intesa's takeover target Monte dei Paschi won't be broken up

MILAN, Aug 14 (Reuters) - Italian Prime Minister Giorgia Meloni hopes Monte dei Paschi di Siena (MPS) won't end up "dismembered" as a result of a takeover bid launched by the country's biggest bank Intesa Sanpaolo, she told financial newspaper Milano Finanza on Friday.

Bailed out by the state in 2017 and reprivatised in 2023-2024, in June MPS became the target of an unsolicited €36 billion ($42 billion) takeover bid by rival Intesa.

Meloni had repeatedly said in recent years the government wanted the use the reprivatisation of MPS to foster competition in the banking sector by helping the emergence of a third large player alongside market leaders Intesa and UniCredit.

"The government is not an active player in the banking sector. We were involved in part when we controlled MPS, which we inherited in a comatose state and restored back to health," Meloni said.

She said MPS, the world's oldest bank with strong local roots, had become a prized asset.

"I hope current market dynamics can lead to an even stronger and more competitive system, to the benefit of households and firms. And I hope MPS will not be dismembered, losing its name and identity."

Intesa's plan envisages selling half of MPS branches, the Siena central offices and its brand to insurer Unipol Unipol, to be combined with Unipol-owned bank BPER.

MPS CEO Luigi Lovaglio said last week he was studying bid defence options, noting that the breaking up of the commercial network would destroy value.

Asked about UniCredit's hostile takeover of Germany's Commerzbank, Meloni said UniCredit, which already owns Munich-based HVB in Germany, should continue to have strong Italian roots

"I hope a positive dialogue can be established between the bank and the German authorities," Meloni added.

($1 = 0.8657 euros)

(Reporting by Anna Uras; editing by Giselda Vagnoni and Valentina Za)