MILAN (Reuters) – The biggest investor in Italy’s BPER Banca on Friday put the brake on a long-mooted merger with rival Banco BPM and said all options were open, after pushing for a change at the helm of BPER.

Insurance group Unipol, which is BPER’s top investor with a 19% stake, last year backed the idea of merger between BPER and Banco BPM to create a third large banking group in the country.

The two banks have been holding talks, people close to the matter have told Reuters, adding that valuations and governance issues were expected to stand in the way of a possible accord.

In an interview with Il Sole 24 Ore daily, Unipol CEO Carlo Cimbri said that BPER’s new Chief Executive Piero Montani would need time to decide on any potential deals.

Unipol on Thursday put forward Montani to replace BPER CEO Alessandro Vandelli. BPER shareholders will name a new board on April 21.

“BPER’s new board will certainly have its hands free,” Cimbri said.

A deal with Banco BPM, which in the past he had described as “a fascinating idea”, was unlikely to happen by the end of the year, he said.

Instead a merger between BPER and smaller rival Banca Popolare di Sondrio appeared as the “most natural option,” he said, given the commercial partnerships between the two banks in asset management and insurance.

Cimbri did not rule out a possible tie-up with Banca Carige after prospective buyer Cassa Central Bank this week withdrew from the deal to acquire the loss-making Genoa-based bank.

He said instead that Monte dei Paschi, the bailed-out bank for which the Treasury is trying to find a buyer, was too big for BPER and a deal had never been considered.

(Reporting by Andrea Mandalà; editing by Valentina Za and Barbara Lewis)