Italian central bank governor under cloud, charged with favouritism |
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Sun, 28 Aug 2005 19:05
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ROME: Bank of Italy's governor Antonio Fazio has rejected calls for his resignation in the wake of charges that he favoured Banca Popolare Italiana in its attempts to buy out a local bank, Banca Antonventa. He claimed there is no substance in the allegations of bias and said he acted scrupulously in following European Union and Italian rules in the matter.
In a deposition before the savings and credit committee of the government, Fazio said the central bank had gone by the regulations prevailing in the matter and there is no partisan attitude on his part.
It is, however, rumoured that the government is not satisfied by his defence and it is likely to bring in reform measures before the parliament so that the central bank functioned efficiently and independently. Italy's economy minister Domenico Siniscalco is understood to have expressed his concern before the committee that the scandal has threatened the country's international standing and led to suspicion that the regulations are ineffective. Siniscalco is expected to refer the issue to a full cabinet meeting and the government for a decision.
The country's agriculture minister Gianni Alemanno, who also attended the committee meeting, was more forthright when he openly said that a profound and substantial reform of the central bank cannot be put off.
The issue concerns charges that Fazio had openly favoured Banca Popolare Italiana against Dutch bank ABM AMRO and Banco Bilbao Vizcaya Argentaria of Spain, which were in the field to acquire Banca Antonventa.
Wiretaps indicate that Fazio overruled his own advisers, who were against Banca Popolare Italiana acquiring Banca Antonventa. He has also been found to be in contact with the CEO of the bank, Gianpiero Fiorani, advising him on how to proceed with the deal. The wiretaps are part of an investigation by magistrates into the finances of Banca Popolare Italiana.
Fazio, governor since 1993, defended his support for Banca Popolare Italiana before the committee saying the bank's capital ratios were strong enough for it to acquire Banca Antonventa.
The takeover was later suspended by regulator Consob, questioning the bank's financial strength. The magistrates suspended Fiorani for his complexity and the regulator has frozen the stakes that the bank and its allies had built up in Antonventa.
The wiretaps came to light after Italy's Il Giornale newspaper printed excerpts of compromising conversations between Fazio and Fiorani -- Fazio at one time found to be telling Fiorani to "come in as usual, by the back door". He also phoned up Fiorani at midnight, before a public announcement, informing him of the approval of the deal. Fiorani is quoted in the scripts as reacting: "Tony, I'm overwhelmed. I've got goosebumps. I'd give you a kiss right now on the forehead if I could."
The Italian central bank oversees the banking activities in the country, including antitrust issues.
According to people in the know, the government wants to change the central bank's ownership structure (it is majority owned by the private sector banks it regulates), an anomaly prevailing since the public sector banks were privatised in 1990s, the the governor's term in office (it is life term now) and his authority to take arbitrary decisions.
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