UPDATE 3-UniCredit CEO dismisses as 'noise' report of Pop Sondrio share buy

(Adds share moves, market values in paragraphs 5-6, Cimbri comment in paragraph 8)

By Valentina Za and Andrea Mandala

MILAN, Jan 18 (Reuters) - UniCredit Chief Executive Andrea Orcel on Thursday said his bank was not buying shares in Popolare di Sondrio, dismissing as "noise" a newspaper report about UniCredit being the lender behind stake-building in the smaller rival.

Asked in an interview with Bloomberg television in Davos if UniCredit was interested in Popolare di Sondrio, Orcel said: "We are interested in everything at the right price."

Daily Il Sole 24 Ore reported that a U.S. investment bank had been building up to a 10% stake in Popolare di Sondrio to allow an Italian lender to become a significant shareholder, with UniCredit being the leading candidate.

"No, we're not," Orcel said when asked if UniCredit was buying shares in Popolare di Sondrio.

Shares in Popolare di Sondrio, which trade at their highest level since 2009 according to LSEG data, closed up 2.3%, giving the bank a market value of 2.7 billion euros.

That compares with a market value of 46.2 billion euros at UniCredit, whose shares have risen 215% since Orcel's appointment in 2021.

An investment in Popolare di Sondrio would pit the buyer against Italian insurer Unipol, which is the biggest shareholder in both Pop Sondrio and rival BPER with stakes of nearly 20% in each bank and insurance partnerships with both.

Unipol CEO Carlo Cimbri, a prominent figure in Italian finance who in recent years has steered BPER onto an expansion path, has said in the past that Pop Sondrio is "a natural option" for BPER as a merger partner.

Orcel has pledged to decide this year whether to boost its payback to shareholders with part of more than 10 billion euros($11 billion) in excess capital UniCredit has piled up.

Having set very stringent terms for mergers and acquisitions, Orcel has said that he would consider extraordinary share buybacks in the absence of suitable targets.

M&A is something "any CEO has in his toolkit," Orcel said in the interview.

"We look at it and we look at it a lot in every market where we are. But we're very disciplined in saying, is it strategic? And does it fit in terms of valuation?"

"Every time I sit in an interview there is something. Yesterday it was Commerzbank, today Popolare di Sondrio," Orcel said. "At this point in time we know what is strategic, but valuations are misaligned. So there is a lot of intermediaries, and a lot of noise of people who try to create transactions but the numbers don't fit."

Bankers say Popolare di Sondrio would be a good geographic fit for UniCredit, whose presence in Italy's wealthy Lombardy region is historically weak.

The gap with market leader Intesa Sanpaolo widened when Intesa took over northern peer UBI in 2020. Orcel tried to make a similar move for Milan-based Banco BPM in 2022 but a leak and the Ukraine conflict thwarted his plans.

($1 = 0.9211 euros)

(Additional reporting by Tommy Reggiori Wilkes in London; Editing by Bernadette Baum, Richard Chang and Mark Porter)