Daniele Nouy, who has headed the ECB's supervisory arm since it started overseeing the euro zone's top banks in 2014, welcomed a move by the Italian government to put aside 20 billion euros (17 billion pounds) to support its weak lenders.

Nouy also rejected criticism that ECB adopted a softer treatment for German banks and declined to comment on a possible tie-up between Italy's biggest retail bank Intesa Sanpaolo (>> Intesa Sanpaolo SpA) and insures Assicurazioni Generali (>> Assicurazioni Generali SpA).

"We do not comment on single banks ... we monitor developments very closely when they affect the banks we supervise and we keep in close contact with the other relevant authorities, where appropriate," Nouy saw quoted as saying by la Repubblica.

(Reporting by Francesca Landini; Editing by Kim Coghill)