UPDATE 1-Pop Milano attempts compromise on top executives

(Adds executive details, background)

MILAN, July 24 (Reuters) - Italian cooperative bank Banca Popolare di Milano (PMII.MI: Quote, Profile, Research) made a compromise in top executive appointments on Thursday as it sought to resolve tensions over governance that have brewed since an aborted merger last year.

The bank, Italy's eighth-largest by market value at around 2.73 billion euros, said in a statement Fiorenzo Dalu, a long-standing executive with links to some of its labour unions, would be director-general, replacing Fabrizio Viola.

It added that it had also appointed a co-director general -- Finance Director Enzo Chiesa, a 43-year-old with experience in funds and favoured by Chairman Roberto Mazzotta.

Viola, who had promoted a strategic partnership with France's Credit Mutuel, quit earlier this month.

Pop Milano has been told by the Bank of Italy to cut the power of employee shareholders, who have a disproportionate weight in management. Independent investors have also criticised its governance structure.

The bank has been trying to sort out its strategy after unions scuppered a merger with Banca Popolare dell'Emilia Romagna (EMII.MI: Quote, Profile, Research) last year.

At its annual meeting in April, shareholders' group BPM 360 Degrees criticised its treatment of investors and called for more openness.

BPM 360 Degrees' founder, activist fund Amber, has 2.16 percent of the bank, but does not yet have voting rights.

Pop Milano said in its statement it now had to "follow a very different path from that which has characterised the past years." (Reporting by Gianluca Semeraro, writing by Jo Winterbottom, editing by Maureen Bavdek)