UPDATE: ECOFIN To Propose New ECB Vice President In Feb - Source

European Union finance ministers in February will formally propose a candidate to succeed Lucas Papademos as the European Central Bank's vice president, a Spanish diplomat to the EU in Brussels said Wednesday.

Spain currently holds the rotating EU presidency.

"Informal discussions will take place at the next Ecofin meeting later this month, but the final proposal will only be made at the meeting on Feb. 16," the diplomat said.

The are three candidates for the ECB's No. 2 job: Portuguese central bank Governor Vitor Constancio; Luxembourg central bank Governor Yves Mersch, and Peter Praet, an executive director at the National Bank of Belgium.

Papademos' eight-year term expires May 31.

Separately, the EU Committee on Economic and Monetary Affairs on Jan. 14 will question the three candidates at a non-public hearing, said an assistant at the Committee, who is familiar with it's work schedule.

Also Jan. 14, the ECB is due to announce its latest interest rate decision.

The Frankfurt-based central bank is widely expected to keep its benchmark rate unchanged at 1%, a record low.

-By Nina Koeppen, Dow Jones Newswires; [phone]; [e-mail]