UPDATE 1-Banco Popolare 1.45 bln euro bond approved by Treasury

* Banco Popolare bonds subject to series of conditions

* Other Italian banks have applied for the bonds

(Adds details, background)

MILAN, June 19 (Reuters) - Italian cooperative bank Banco Popolare (BAPO.MI) said on Friday the Italian Treasury has approved subscription of 1.45 billion euros in state-backed bonds to be issued by the bank.

The bank is the first to win approval for the bonds subscribed by the Treasury and aimed at boosting capital ratios in the sector in the face of the financial crisis.

In a statement, Banco Popolare said it also signed a Memorandum of Understanding with the Treasury laying down certain conditions, including loans to businesses.

Banco Popolare has committed to increase by 6 percent a year its lending to small and medium-sized companies for the next three years, compared to average loan levels seen in 2007-2008.

The commitment is conditional on credit quality being good enough and the principles of prudent and healthy bank management being met, it said.

The bank must also meet conditions agreed with the Treasury on mortgage lending and ensuring adequate liquidity for public sector creditors, it said.

In May, Treasury officials said four banks had made requests for the state-backed bonds, including Banco Popolare, for a total of 6 billion euros.

Banca Popolare di Milano (PMII.MI), Banca Monte dei Paschi di Siena (BMPS.MI) and UniCredit (CRDI.MI) have made requests to the Treasury while Intesa Sanpaolo (ISP.MI) has said it is preparing a request. (Writing by Nigel Tutt: Editing by David Jones)