Mr Fiorani had already been temporarily disqualified from office

Gianpiero Fiorani had already been suspended after being named in a judicial inquiry into the bank's conduct in a controversial bid battle.

The inquiry is focusing on how BPI and allies built up a near-40% stake in rival bank Antonveneta.

Dutch bank ABN Amro now looks set to buy BPI's stake and win control.

BPI said after the close of trading on Friday that Mr Fiorani had handed in his "irrevocable and immediate" resignation.

The move increases pressure on Italy's central bank chief Antonio Fazio, who is accused of unduly favouring BPI's bid over ABN Amro's with the aim of keeping the bank in Italian ownership.

Italian Agriculture Minister Gianni Alemanno described Mr Fiorani's resignation as "an example that could and should be understood and followed".

The minister called on Mr Fazio to follow suit "to save the credibility of the Bank of Italy".

Wiretap

Mr Fiorani and chief financial officer Gianfranco Boni were temporarily barred from office last month pending the outcome of an inquiry into alleged market-rigging and insider trading.

Opposition parties have called on Antonio Fazio to resign

BPI's stake in Antonveneta and shares held by two financiers, Stefano Ricucci and Emilio Gnutti, were impounded.

BPI had been seen as the favourite to acquire its Italian rival after Antonveneta shareholders rejected ABN Amro's bid in July.

However, the deal began to unravel after transcripts of wiretapped conversations between Mr Fiorani and Mr Fazio were published.

Mr Fazio was quoted as telling the BPI boss that its bid had been cleared before the decision was made public, prompting claims that Mr Fazio had shown undue favouritism.