MILAN, Nov 5 (Reuters) - Italy's data protection

authority said on Tuesday Intesa Sanpaolo had

underestimated the seriousness of a data breach incident

involving thousands of customers, widely reported to include

Prime Minister Giorgia Meloni.

Last month, the authority asked the bank to provide

clarification over the case involving an Intesa employee who

allegedly accessed the data of about 3,500 clients.

Intesa said in a statement that further checks had shown the

number of customers affected was "significantly lower than

previously reported in the media".

The data protection watchdog instructed the bank to inform

all customers whose data has been violated within 20 days.

Intesa first suspended and then dismissed the employee who

spied on the accounts.

On uncovering the breach and conducting a preliminary audit,

Intesa had informed the data protection authority of the

incident, while filing a complaint with prosecutors. After going

through the procedure it was allowed to sack the employee.

But the authority said in a statement on Tuesday that the

bank had not adequately informed it about the extent of the

breach, which became apparent later due to press reports and was

only confirmed subsequently by Intesa.

"Contrary to the bank's assessment... the breach of the

personal data represents a high risk for the rights and the

freedoms of the individuals concerned," the authority said.

It said the potential consequences of the breach had

included disclosure of information on the financial status of

individuals and reputational damage.

The authority said it would assess the adequacy of the

security measures the bank has put in place and ordered it to

provide feedback within 30 days.

Intesa said it had already started working to respond to the

authority's requests.

Ensuring the highest level of security for its customers'

data was a priority, it said, adding that it had already

enhanced its systems and control procedures.

Intesa also said there was no evidence the data had been

shared outside the bank.