MADRID, Oct 9 (Reuters) - The CEO of Spain's Caixabank said on Monday the lender, a major shareholder in Telefonica, welcomed the move by Saudi Arabia's STC Group to build a stake in the Spanish telecoms group.

STC, Saudi Arabia's largest telecoms operator, said last month it aimed to become Telefonica's biggest shareholder with a stake of 9.9%, worth around 2.1 billion euros ($2.2 billion).

"By definition it has to be good news. We need foreign investment, we have to look at it favourably," Caixabank Chief Executive Gonzalo Gortazar told a financial event.

He added, however, that STC's move had generated "controversy because of that element of surprise, which is not always the best way to enter Spain."

Caixabank has a 3.5% stake in Telefonica, while Criteria, Caixabank's holding company, also holds 2.5% of the shares.

"Together with Telefonica, we have to analyse the particularities of this investment and the possibilities of cooperation," Gortazar said.

STC's holding consists of 4.9% of Telefonica's shares and financial instruments that give it another 5% in so-called economic exposure to the company.

As Telefonica is considered a defence service provider, the Defence Ministry has a say in acquisitions and holdings between 5% and 10% unless the buyer commits not to request a seat on the board.

"It should be left to the board of Telefonica and the government to draw their conclusions for the next steps," Gortazar said.

STC is yet to request authorisation from the Spanish government to exercise voting rights corresponding to the financial instruments.

The government has three months to rule on the matter once the request has been submitted, though the timeline can be extended if it requests additional information from the buyer.

"They (STC) see possibilities for cooperation because of the good work and the state Telefonica is in," Gortazar said.

The Saudi telecoms company has said it does not intend to acquire control or a majority stake in Telefonica. (Reporting by Jesús Aguado and David Latona Editing by Andrei Khalip and Mark Potter)