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MILAN, May 30 (Reuters) - A Milan appeals court on Wednesday overturned a previous ruling and acquitted former Bank of Italy governor Antonio Fazio from market-rigging charges stemming from a takeover fight over local lender Banca Nazionale del Lavoro (BNL) in 2005.
The 75-year old former central banker is facing two separate trials for his role as a regulator in two cross-border financial battles that tarnished Italy's reputation and led to an overhaul of the banking sector.
In the BNL case, which pitted mid-sized local insurer Unipol against Spanish bank heavyweight BBVA, a lower court had sentenced Fazio to three-and-a-half years in jail.
In a separate trial on Monday, Fazio was sentenced to two-and-a-half years in jail for trying to thwart a foreign takeover of local lender Banca Antonveneta seven years ago.
The sober-mannered governor quit the Bank of Italy in 2005 after phone tap transcripts raised allegations he had favoured domestic bidders against foreign players.
France's BNP Paribas eventually bought BNL in 2006 for 9 billion euros while Dutch lender ABN Amro secured Banca Antonveneta.
The departure of Fazio, who was replaced by Mario Draghi, paved the way for an unprecedented wave of mergers and takeovers in Italy's protected banking system and for a review of the role of Italy's central bank head.
Both court sentences could still be overhauled by Italy's supreme court. Fazio is in any case unlikely to go to jail because of his age and because the sentence would fall under an Italian amnesty.
Unipol, which was ordered to pay a 420,000 euro fine on Wednesday, had launched a bid for BNL in 2005. As the battled raged on, the insurer's senior managers were ousted after being put under investigation for insider trading.
Former Unipol chairman Giovanni Consorte was sentenced on Wednesday to one year and seven months in prison, while his former deputy Ivano Sacchetti received a jail sentence of one-and-a-half year.
The court also acquitted Unipol's Chief Executive Carlo Cimbri and Italian businessman Francesco Gaetano Caltagirone. (Reporting by Manuela D'Alessandro; Editing by Angus MacSwan)