Italian judge drops Intesa Sanpaolo tax probe - source

MILAN (Reuters) - An Italian judge has dropped an investigation over alleged tax irregularities at Intesa Sanpaolo , which had also involved the bank's former CEO Corrado Passera, a source with direct knowledge of the matter said on Thursday.

The source, who declined to be named, said the judge had shelved the case because the allegations were groundless and after a request by the prosecutor to do so.

Investigators in the northern region of Piemonte had been examining tax transactions at Intesa's former unit Cassa di Risparmio di Biella e Vercelli in 2006-2007, according to judicial documents seen by Reuters in 2012.

Intesa said last year it considered the operations, carried out in 2006, were "fully compliant with existing rules."

Passera, who also served as industry minister in the government of Mario Monti, signed off on Intesa's balance sheet during 2006 and 2007 in his capacity as chief executive of Italy's largest retail bank.

The bank had no immediate comment on the decision and Passera could not immediately be reached.

(Reporting by Gianluca Semeraro,; Writing by Isla Binnie; Editing by Anthony Barker)