SAO PAULO (Reuters) - Brazil's federal prosecutors have launched an investigation into alleged fund diversion by a former senior executive at Itau Unibanco ( ITUB ), set to take a key role at Spanish bank Santander in coming months.

Latin America's largest bank accused its former Chief Financial Officer, Alexsandro Broedel Lopes, of misappropriating funds while working at the bank, in a filing published in December. The bank later sued Broedel for damages.

Itau alleges that its former executive, hired by Santander last year, breached internal policies through his involvement in irregular payments for consultancy reports. 

In a regulatory filing, Itau said it investigated the executive's conduct for several months and concluded he was involved in improper transactions totaling more than 4.86 million reais ($830,000) between 2019 and 2024.

Broedel's representatives said in a statement that their client denies any wrongdoing and wonders why suspicions were raised after he resigned from his position to take on a global role with one of Itau's main competitors.

A Santander spokesperson said: "Mr. Broedel is a highly regarded senior executive who until July was Itau CFO. He is due to take over as (chief accounting officer) later this year and we are monitoring any developments."

The federal prosecutors office in Sao Paulo said in a statement that it could not comment on the case because it is under seal.

As part of its lawsuit targeting Broedel, Itau asked a judge to register the existence of proceedings against him in the deed of a house valued at almost $2 million that the executive is trying to sell. The request is meant to work as a guarantee that Itau will have access to funds related to any sale if it wins the case.

On Thursday, a Brazilian judge agreed to the request.

According to Broedel's representative, the executive decided to sell his house because he is now living in Spain.