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UPDATE 1-New Zealand treasury head named Irish central bank chief

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DUBLIN, May 1 (Reuters) - Ireland appointed New Zealand treasury chief Gabriel Makhlouf as its new central bank governor on Wednesday, replacing Philip Lane who leaves next month to join the European Central Bank's executive board, the finance ministry said.

A former top UK civil servant, Makhlouf served as principal private secretary to then British finance minister Gordon Brown before being appointed secretary to the New Zealand treasury in 2011, where he has also been chief economic and financial advisor to the government.

Makhlouf will sit on the governing council of the ECB as part of the new role, the first time Ireland will have two rate setters.

He will take up the position on Sept. 1 and it will be up to the Central Bank Commission - which manages the activities of the bank - to appoint a temporary governor for the three-month period after Lane's departure, the finance ministry said in a statement.

Makhlouf becomes the first non-Irish national to lead the bank after emerging from a shortlist that included one of Lane's two deputies, Sharon Donnery, who narrowly lost out in the race to head the ECB's supervisory arm last year.

Makhlouf takes on an economy that has been the best performing in Europe since 2014 but may face a risk of either overheating or another major challenge if neighbouring Britain ended up leaving the European Union without a deal to smooth the transition.

The central bank's supervisory capabilities will also be tested during his seven-year term after more than 100 financial services firms applied to the bank to set up or extend operations in Ireland as a result of Brexit. (Reporting by Padraic Halpin and Carmel Crimmins Editing by Catherine Evans and Frances Kerry)