MILAN (Reuters) - The European Central Bank has given a preliminary nod to the possible appointment of Marco Morelli, head of Bank of America Merrill Lynch in Italy, as chief executive of ailing lender Monte dei Paschi di Siena, a source close to the matter said.

If confirmed, the ECB's informal green light, first reported by Ansa news wire, would help pave the way for a swift succession at the helm of Italy's third biggest bank, whose chief executive Fabrizio Viola agreed to step down on Thursday.

The bank needs to move quickly to implement an emergency rescue plan which includes a capital increase of up to 5 billion euros ($5.6 billion) and avert the risk of being wound down.

Monte dei Paschi and the ECB declined to comment.


In its role as banking supervisor for the euro zone, the ECB could potentially block the appointment of a manager who is not judged "proper and fit".

Morelli, who was Monte dei Paschi's chief financial officer before leaving the Tuscan bank in 2010, was not available for comment.

The source said head hunters Egon Zehnder, appointed by Monte dei Paschi for the CEO selection process, would give the results of its survey of potential candidates to the lender on Monday, before Chairman Massimo Tononi travels to Frankfurt for meetings with the ECB.

The formal appointment is likely to take place towards the middle of week, a second source said.

Morelli, from the start indicated by sources as the frontrunner to take over from Viola, has not commented publicly on whether he would be available for the job.

(Reporting by Paola Arosio; Editing by Silvia Aloisi and Catherine Evans)

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