MILAN (Reuters) - Banca Popolare di Milano (>> Banca Popolare di Milano) is ready to start looking at possible tie-ups and would like to seal a merger before its planned conversion into joint-stock company in the next 18 months, the chief executive of the Italian cooperative bank said.

Italy has passed a landmark reform of the ownership structure of large cooperative lenders which forces them to drop their cooperative status and become joint-stock companies.

The move is expected to spur defensive mergers among banks seeking to boost their size and profitability and stave off possible hostile takeovers.

Popolare di Milano CEO Giuseppe Castagna said on Saturday the bank would start looking at possible tie-ups after its shareholders approved 2014 results, but had had no contacts yet.

"We are open to all tie-up options based on a solid industrial plan and that allows the creation of an important Italian banking group," Castagna said.

Informal talks among merger candidates are already under way and bankers say Popolare di Milano is a particularly attractive partner because it is based in Italy's financial capital Milan and has a strong presence in the surrounding Lombardy region, the country's richest.

Pier Francesco Saviotti, chief executive of larger cooperative lender Banco Popolare (>> Banco Popolare Societa Cooperativa), said on Saturday a merger between the Verona-based cooperative bank and Popolare di Milano was not "an impossible dream" though it was difficult.

Castagna said Popolare di Milano would favour a merger with another cooperative lender while a tie-up with a foreign partner would be complicated.

A merger should preferably take place before the conversion into joint-stock company makes the bank more vulnerable to hostile takeover attempts, he said.

The reform approved by parliament last month is forcing large cooperative lenders to drop limits to ownership and scraps voting rules that gave each investor one vote regardless of the size of their stake.

Those rules had long been seen as discouraging mergers and also keeping new investors at bay.

The 10 largest popolari targeted by the reform have 18 months to adopt the changes. Merger talks are expected to gather momentum from May, bankers say.

(Additional reporting by Gianluca Semeraro in Novara, writing by Valentina Za. Editing by Jane Merriman)

By Silvia Aloisi and Andrea Mandala