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* Bank seen close to centre-left PD party, leading in polls
* Rival politicians accuse PD of mismanagement, slam bailout
By Silvia Aloisi
MILAN, Jan 23 (Reuters) - A scandal over shady derivatives deals bleeding money at Banca Monte dei Paschi di Siena has thrust Italy's third-biggest lender into the country's election campaign and risks embarrassing the centre-left over its ties with the bank.
The bank, which had to request a 3.9-billion-euro state bailout ($5.2 billion) last year, is widely regarded as close to the centre-left PD party, which is leading in opinion polls and controls the Tuscany region where Monte dei Paschi is based.
Monte dei Paschi's woes deepened on Tuesday after reports it would book a loss of at least 220 million euros due to a 2009 derivative trade with Japanese bank Nomura, one of several deals currently under scrutiny.
Its former chairman Giuseppe Mussari stepped down as head of Italy's banking association on Tuesday after Nomura said he personally approved the deal, though he denied any wrongdoing.
Centre-right and far-left politicians campaigning for next month's vote seized on the scandal to accuse the PD of mismanaging the bank, the world's oldest, and criticise outgoing prime minister Mario Monti for using taxpayer money to save it.
"This Monte dei Paschi story confirms that left-leaning banks can allow themselves all sorts of distractions, naturally at the expense of the tax payer," said Antonio Leone of former prime minister Silvio Berlusconi's PDL party.
"The icing on the cake is that Monti has granted a 3.9 billion euro loan to Monte dei Paschi, obviously taking that from our pockets."
The head of a technocrat government appointed in November 2011 to rescue Italy from a Greek-style financial meltdown, Monti is campaigning for a second term on a centrist ticket.
PD leader Pierluigi Bersani said his party was not to blame for the bank's problems. "No responsibility for the PD, for God's sake: the PD is the PD and the banks are banks," he said.
"HOUSE OF CARDS"
The bank's executives also face a grilling by Beppe Grillo, a comedian now leading the anti-establishment 5 star movement which could emerge as Italy's third biggest party in the vote.
Grillo, a Monte dei Paschi shareholder, will attend the bank's extraordinary shareholder meeting on Friday.
The movement's website in Siena compared the bank to a "house of cards where the pieces are falling every day."
Friday's meeting was called to approve the terms of the state bailout but is set to be overshadowed by shareholder anger over the derivatives loss.
Chairman Alessandro Profumo and Chief Executive Fabrizio Viola, appointed last year to turn the bank around, are seeking to clean up a balance sheet burdened with a huge exposure to Italian government bonds and hedging bets gone wrong.
The bank says it is reviewing several structured trades negotiated by its previous management. But analysts say it needs to come clean and get its house in order quickly to dispel investors' worries about mounting losses.
On Wednesday, the bank's shares plunged for a second day in a row, shedding more than 8 percent.
Siena, where Monte dei Paschi is nicknamed "Daddy Monte" and is the biggest employer, has long been a PD stronghold.
In good times, the bank's largest shareholder - a charitable foundation controlled by local PD politicians - used dividends to fund social and cultural projects.
But as the bank stretched its finances with the costly 2007 acquisition of a smaller rival, the foundation ran up a big debt to fund two capital increases. Last year, it had to cut its stake to 34.9 percent to pay back creditors.
Monte dei Paschi was forced to ask for state aid in June after it became one of only four European banks that failed to meet tougher capital requirements set by regulators. It posted a loss of 4.7 billion euros in 2011, and of 1.66 billion euros in the first nine months of 2012.
($1 = 0.7526 euros) (Additional reporting by Steve Scherer in Rome; Editing by Mark Potter)