(Adds reaction, details) By Dan Williams JERUSALEM, Jan 16 (Reuters) - Israel's state prosecutor ordered a criminal investigation on Tuesday into Prime Minister Ehud Olmert's role in the 2005 privatisation of Israel's second largest bank, the Justice Ministry said in a statement. An official in Olmert's office said the prime minister would "fully cooperate". The right-wing Likud Party and other opposition groups called for Olmert to resign and for new elections to be held. The announcement was a fresh blow to Olmert's government, already dogged by a string of political scandals and criticism over last summer's inconclusive war against the Lebanese Hezbollah guerrilla group. A poll published on Friday indicated Olmert's approval ratings had slipped to 14 percent and his centrist Kadima party would lose nearly two-thirds of its strength in a new election. Recent polls suggest Likud would win the most seats. "The investigation brings the end of the government near," said lawmaker Dan Yatom, a member of the left-leaning Labour Party, Kadima's largest coalition partner. However, Kadima's solid majority in parliament makes the government difficult to unseat. BANK SALE Israel's state comptroller had been looking into whether Olmert promoted the interests of two businessmen, described in media reports as close friends of Olmert's, in the state sale of Bank Leumi in 2005. Neither man purchased the bank and Olmert, who was finance minister at the time, has denied any wrongdoing. The U.S. investment group Cerberus-Gabriel ended up buying a 9.99 percent stake in Leumi from the government for 2.47 billion shekels ($585 million). It also received an option to boost its stake to 20 percent, enough to become the largest shareholder. Investigators first approached Olmert on Oct. 29 during a preliminary investigation. State prosecutor Eran Shendar found there was enough evidence to order a criminal investigation, the ministry said. Israel Radio quoted an aide to Olmert urging police to act swiftly to "remove the unnecessary cloud" over him. "This is the beginning of the end for Olmert," lawmaker Ran Cohen of the left-wing opposition Meretz Party told Israel Radio. The government has had to contend with a series of scandals. A close aide to Olmert, Shula Zaken, is under house arrest in connection with an investigation focusing on suspicions that influential businessmen arranged the appointment of officials to the tax authority in return for tax breaks. She denies the allegations. The state comptroller, Israel's main government watchdog, is also examining the terms of Olmert's purchase of a Jerusalem apartment in 2004. (Additional reporting by Jonathan Saul and Allyn Fisher-Ilan)
