By Valentina Za

MILAN (Reuters) -Italy's biggest bank, Intesa Sanpaolo, has made its first proprietary bitcoin trade, buying 1 million euros ($1 million) of the world's largest digital currency in what CEO Carlo Messina described as "a test".

Intesa in 2023 set up a proprietary trading desk for digital assets and last year started handling spot trades with cryptocurrencies.

An internal memo seen by Reuters showed Intesa bought 11 bitcoins on Monday.

"We won't become a bitcoin player," Messina told reporters after an event to present a new accord with employers' lobby Confindustria to make 200 billion euros in lending available through 2028 for company investments.

"As a wealth management company that has the ambition to become like (Swiss rival) UBS, we have very sophisticated clients that may ask for this kind of investment and you can't serve them unless you have a presence (in the market)," he added.

Bitcoin more than doubled in value in 2024, driven by the U.S. market regulator's approval for exchange-traded funds tied to its spot price, and optimism over easing regulatory hurdles under incoming U.S. President Donald Trump.

As bitcoin flirts with the $100,000 mark, some analysts expect it to more than double in value again this year.

Messina said the small trade showed Intesa merely conducted "a test", and added the bank had "very limited" room to invest in crypto assets.

"We tested how to handle any potential requests from clients, but there will anyway be very tight limits and clients will need to prove they understand potential risks," he said.

Speaking earlier during the conference, Messina urged non-professional investors and in particular households to stay away from crypto investments.

"Don't do it," he said.

Intesa will perform better than expected this year and work on a new multi-year strategy that it will present to investors in 2026, the CEO added.

Intesa can benefit from steering clear of the current round of consolidation in Italian banking and the integration processes they entail, he said, adding: "We don't have those complications to deal with and we don't want them."

Monday's Intesa trade was first reported by Italian daily La Stampa.

($1 = 0.9747 euros)

(Reporting by Valentina Za. Editing by Louise Heavens and Mark Potter)