Potential sale of MPS to UniCredit 'inappropriate' with Padoan as chairman - 5-Star

FILE PHOTO: Unicredit bank logo is seen in the old city centre of Siena, Italy June 29, 2017. REUTERS/Stefano Rellandini

MILAN (Reuters) - The appointment of former Economy Minister Pier Carlo Padoan as chairman designate of UniCredit would make it inappropriate for the Italian bank to buy state-owned Monte dei Paschi (MPS), lawmakers from Italy’s co-ruling 5-Star Movement said.

Padoan oversaw the bailout of Italy's oldest bank, Monte dei Paschi BMPS.MI, back in 2017 when Rome spent 5.4 billion euros ($6.3 billion) on a 68% stake. Under an agreement with European Union authorities, the stake must be cut by mid-2022.

UniCredit CRDI.MI is considered as the best candidate to take over Monte dei Paschi and bankers had said Padoan's appointment could help to foster a deal.

“It would be paradoxical if, after the public commitment that provided for a support of several billion euros ... today there was a possible sale of MPS to UniCredit with Padoan in the role of chairman,” the 5-Star lawmakers wrote in a note.

Both European Commissioner Paolo Gentiloni and Telecom Italia Chairman and former Bank of Italy Deputy Governor Salvatore Rossi on Thursday expressed appreciation for Padoan.

UniCredit on Tuesday named Padoan as a director and said it would appoint him as chairman when it renews the board next spring.

Reporting by Giuseppe Fonte, writing by Agnieszka Flak