UPDATE 2-Malaysia's Sime names PM's ally as new CEO

* Says Bakke's appointment "as soon as practicable"

* Bakke linked closely with Prime Minister Najib

* Says Azhar Abdul Hamid remains as acting CEO until then

* Says still expects to report profit in FY2010

(writes through, adds Sime confirmation, more quotes)

By Royce Cheah

KUALA LUMPUR, June 14 (Reuters) - Malaysia's Sime Darby (SIME.KL) appointed Mohamad Bakke Salleh as its new chief executive after mounting losses at its energy division led to its first quarterly loss and the removal of its CEO last month.

Bakke, who has been linked closely with Prime Minister Najib Razak, is currently the chief executive officer of Felda Global Ventures Holdings Sdn Bhd, a unit of state plantations agency Federal Land and Development Authority (FELDA).

"Mohd Bakke has the necessary experience in corporate restructuring exercises as well as management expertise in the plantation and property industries," Sime said in a statement on Monday.

Najib has a long and close association with FELDA, an agency over which he has direct oversight and which was set up by his father, Malaysia's second Prime Minister Abdul Razak Hussein.

Sime removed Ahmad Zubir Murshid as chief executive in May after huge cost overruns at four energy projects in the Middle East and the east Malaysian state of Sarawak pushed it to its first quarterly loss since the company was formed in 2007. [ID:nSGE64C0B1]

Sime, the world's largest plantations company by land ownership, said Bakke's appointment will take effect "as soon as is practicable".

"Until such time that the new man takes over, Azhar (Abdul Hamid) will remain as acting CEO," Musa Hitam, Sime's chairman told a press briefing.

Sime, originally a plantations company, is now a conglomerate with interests spanning palm oil, property and auto sales.

"In spite of problems in the energy and utilities division, other divisions are doing well and we expect to record an overall profit for the current financial year," said Musa.

Sime Darby, revamped in 2007 after a merger with another two state-owned plantation groups, last month posted a January-March net loss of 309 million ringgit ($93.21 million) as huge cost overruns bled its energy unit. It reported a 150.5 million ringgit profit a year ago.

Up until the losses on projects in Sarawak state and the Middle East emerged, Sime was Malaysia's largest listed company.

Its shares have fallen over 10 percent in the last three months and it has been overtaken by banking group Maybank (MBBM.KL) as the country's largest company by market capitialisation.

"Sime has always been viewed as a plantations company, so it makes sense to put someone from FELDA there but whether he can run the group remains to be seen," said James Ratnam, plantations analyst at TA Research in Kuala Lumpur.

Sime shares closed Monday up 0.13 percent at 7.81 ringgit compared with the 0.19 percent gain on the main stock index .KLSE.

(Writing by Julie Goh; Editing by David Chance and Valerie Lee)