The Bank of Italy on Tuesday gave the thumbs down to a bid by Italy's third-largest insurer Unipol to take over the nation's sixth-largest bank Banca Nazionale del Lavoro.
The decision - the first under new governor Mario Draghi - was widely expected after the opening of a criminal investigation against Unipol's ex-chairman Giovanni Consorte who has quit under suspicion of financial chicanery.
Ex-Treasury chief Draghi was appointed to replace Antonio Fazio who was forced to resign on charges of insider trading and favouring domestic bidders over foreign ones. With Unipol out of the picture, BNL is now ripe for a rival bid by Spain's No.2 bank Banco Bilbao Vizcaya Argentaria (BBVA).
BNL has made no secret of its view that the Spanish bank's bid was better.
Fazio was replaced by Draghi on December 29 after two takeover scandals.
First he championed a small northern Italian bank, Banca Popolare Italiana (BPI), over Dutch rival ABN Amro for the much larger Antonveneta bank. He was also criticised for favouring Unipol over BBVA. BBVA says the Bank of Italy unfairly blocked its bid for BNL at the last minute.
BPI's bid for Antoveneta collapsed amid a welter of probes into suspected misdeeds by bankers and financiers - probes which eventually spread to Unipol. The Unipol-Antonveneta affair has led to much soul-searching on the Italian Left because the insurer is owned by Italy's thousands of leftwing cooperatives.
Premier Silvio Berlusconi's centre-right alliance have leaped at the opportunity to claim that the biggest opposition party, the Democratic Left (DS), is tainted with financial scandal.
In launching his broadsides, Berlusconi claimed that he, by contrast, "never made money out of politics."
he opposition has rejected this claim, saying that the media magnate has benefited from political protection since the time of late Socialist leader Bettino Craxi and has colossal conflicts of interest as the owner of a huge conglomerate which includes Italy's three main commercial TV stations.
The DS has denied claims it interfered in the Unipol bid but some leaders have acknowledged the bid was under-funded.
